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Wall Street ends higher after Federal Reserve keeps interest rates steady; AIG worries remain

NEW YORK -- Wall Street ended another tumultuous session with a sizable gain Tuesday, partly recovering from its worst sell-off in years after the Federal Reserve said it was keeping interest rates steady. The central bank soothed fears of a worsening financial crisis even as the market waited to learn the fate of troubled insurer American International Group Inc.
In a statement accompanying its decision, the Fed noted the growing strains in the financial markets a day after the Dow Jones industrials plunged 504 points in reaction to continuing turmoil in the financial sector. The Fed also noted the ongoing weakening of the labor market. But it also sought to give some reassurance by saying it expected its policy moves to foster moderate economic growth over time.

The Fed has cut its target federal funds rate by 3.25 percentage points to its current level of 2 percent over the past year. Many on Wall Street expected the Fed to keep rates steady but there was some hope that the central bank would try to calm uneasy financial markets with a rate cut.

Still, the fact that the Fed didn't lower rates was a sign that it doesn't believe the economy needs that type of stimulus. It reiterated that it believed its moves to inject more liquidity into the banking system to help struggling financial institutions would help them, and in turn the economy overall.

"This was the right thing to do," said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles. "I just don't think the Fed should be responding to the financial market crisis at this stage."

He contends other moves, like broadening the type of collateral the Fed accepts from banks and adding money to the banking system are more effective at addressing credit troubles.

In late afternoon trading, the Dow rose 169.92, or 1.56 percent, to 11,087.43, after falling about 100 points soon after the Fed announcement. Earlier, the Dow rose as much as 105 points and fell as much as 175 in fractious trading; on Monday, the Dow suffered its largest drop since the September 2001 terror attacks.

Broader stock indicators advanced. The Standard & Poor's 500 index rose 11.27, or 0.94 percent, to 1,203.97, and the Nasdaq composite index rose 15.28, or 0.70 percent, to 2,195.19.

Bond prices fell sharply as investors turned away from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.49 percent from 3.41 percent late Monday.

Light, sweet crude fell $3.70 to $92.01 on the New York Mercantile Exchange as investors placed bets that slowing economic growth will crimp demand. The dollar was mixed against other major currencies, while gold prices fell.

European stocks turn negative; HBOS tumbles
17 sept,2008

European stocks surrendered early gains and turned negative on Wednesday morning, as the rescue of embattled insurer AIG failed to quell credit fears, with UK lender HBOS plummeting 42 percent. FTSEurofirst 300 index of top European shares was down 0.6 percent at 1,084.38 points, after gaining more than 1.5 percent in early trade. A number of banking stocks turned negative, with Royal Bank of Scotland down 20.7 percent and Fortis down 5.3 percent.

Govt to check artificial volatility in rupee: Nath

New Delhi, Sept 17: Government is not interfering with the rupee movement but will have to "step in" if it finds "artificial" volatility in the exchange rate, Commerce and Industry Minister Kamal Nath said on Wednesday.

"We do not calibrate it (rupee) as a deliberate method. When there is any zoom (volatility) which is not natural... whenever there is artificiality in it, obviously all governments will have to step in," Nath told reporters here.

After the rupee touched a two-year low of 46.89 against a US dollar yesterday, the Reserve Bank of India stepped in with dollar supply. It also injected liquidity into the market by relaxing norms under which banks keep part of their deposits in government securities.

The RBI move had an impact on rupee which appreciated by a massive 62 paise today in early trade.

Although about 15 per cent depreciation in rupee is giving a boost to exports, it has made imports expensive leading to concerns in the government battling over 12 per cent inflation.

Nath said steps taken by the government have started showing impact on the price rise.

"Inflation is going down. We have put into place measures and we hope that these measures are going to take effect. They have started showing signs of taking effect," he said.

ICICI denies rumours of top management selling bank`s shares

Mumbai, Sept 17: The country's largest private sector lender ICICI Bank on Wednesday said its top management members have not sold any shares of the bank during the current year.

The clarification came following market rumours that some members of ICICI Bank top management have been selling the shares of the bank in the last few days following the global financial crisis.

"A malicious rumour is being spread to the effect that some of the top management have been selling ICICI Bank shares in the last few days. These rumours are baseless," an ICICI Bank statement said here.

ICICI Bank shares were trading at Rs 558.50, down by Rs 33.15 from its previous close, just prior to the market closing.

ICICI Bank on Tuesday said that it would make an additional provisioning of USD 28 million (around Rs 112- crore) to cover its investments in the collapsed US investment bank Lehman Brothers' senior bonds.

However, the bank has not been majorly impacted owing to its exposure to Lehman Brothers, the bank said.

"There is no other material impact on ICICI Bank or ICICI Bank UK plc on account of exposure to Lehman Brothers," ICICI Bank's Joint Managing Director Chanda Kochhar had said.

ICICI Bank has around USD 80 million exposure in senior bonds of Lehman Brothers Inc, which constitutes less than one percent of ICICI Bank UK plc's total assets, which are around USD 8.7 billion.

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PNB ties up with four brokerage firms for online trading

Sept 19: Punjab National Bank on Friday said it has tied up with four brokerage houses to provide online trading facility to its customers.

Shares of the bank closed at Rs 523.60 on the Bombay Stock Exchange, up 1.28 per cent from its previous close.

PM for ‘appropriate’ energy prices

Sept 20: Prime Minister Manmohan Singh on Saturday chaired a meeting of the Planning Commission to discuss a draft on integrated energy policy. During the meeting, Dr Singh cautioned that the country’s demand for energy is likely to increase manifolds and that ‘appropriate’ pricing is a must for investment to augment supplies.

“Energy is a crucial input in our development and our energy requirement for growth is indeed very large. This makes us vulnerable to uncertainty of international prices and also reliability of supplies. It is therefore important to undertake optimal exploitation of domestic energy resources with a view to increasing our country’s energy security”, Dr Singh said.

Hi,
I have been following ur thread frm the last few days..
I have following two queries:

1) I have seen the quote for PNB, does it mean tht this stock will increase in near future?
2) Does the PM's speech gives us a signal to invest in stocks related to energy?

Looking fwd for ur expertise replies

Bro dont know much but can suggest u to follow the rule of BUY on rumour n sell on news if u want to earn in mkt...........

Ha ha,,, rumours??? funny...
Any ways thanks for the quick reply