Averages struggled all day trying to extend their winning streak to 3 consecutive days, but the Dow fell flat. Dow was down 5, but NAZ was up 5 with advancers only 5-4 ahead of decliners. On this mild day, telecom was the strong sector today while energy & retailers pulled back. Most stock market indicators remained close to break even for much of the day, ending with only modest changes. The major exceptions were the Dow Jones REIT Index dropping 6½ to 165, REITS find it tough to get any friends these days, & the VIX, dropped 6½ to 54 indicating that a sense of calm is returning. However, at 54, it remains at was once an unimaginable level (early last month). In commodity land, oil pulled back 3½ on all the gloomy news about the world being in a major recession.
More grim news on auto sales. The Bloomberg headline (below) says it all, worst month since 1945. GM sales were down 45%, Ford down 30%, etc. For what it's worth, GM remains #1 in auto sales in the US. Tight credit & low consumer confidence are behind these sales declines.
•Auto Sales in U.S. Plunge; October Was the Worst Month Since 1945, GM Says
Economists now forecast the recession will last thru the end of next year. 79% say the economy will grow at less than a 1% annual rate & 38% say the economy will shrink. Just 36% say the rate cuts & other initiatives by the FED to unfreeze credit markets were having a positive impact, while 58% said the programs were having little impact.
Economists predict recession to last through 2009-
Banks are making it tougher for customers to borrow. About 85% of the large banks in a survey have tightened lending standards, the highest in 18 years they've been doing these surveys. Additionally, 95% of banks have raised costs to large customers. Tighter credit is the wrong medicine for an ailing economy.
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Banks Tighten Lending Standards Most on Record as Economic Outlook Dims
Rates on Treasury bonds have ticked up recently from around 3½% to 3.90%, largely related to fears that borrowings will increase as mentioned below.
•Treasury May Borrow Record $550 Billion in Quarter as Rescue Swells Budget
