Market Sentiment Continues To Hold
U.S. equity markets ended only slightly lower on Tuesday as early morning economic data started off the day with a spurt of confidence. The ISM Non-Manufacturing report gauged Chicago area service related industries deteriorating at a lower rate than previous months in April. The report clocked in at 43.7, above the markets estimate of 42.2 and greater than the March level of 40.8. Goldman ICSC store sales for the previous week also improved at a rate of 0.7% opposed to the -0.7% decline in the week before.
Federal reserve chairman Ben Bernanke testified before the Congressional Joint Economic Committee at 10 am, claiming that he expected unemployment to top out under 10% and that the U.S. would see 2% GDP growth for the 2010 fiscal year. When prodded, Bernanke swore that he had no part in forcing Bank of America (
BAC) CEO Ken Lewis to buy
Merrill Lynch at the end of 2008.
Over $11 billion dollars of capital bond raising under the TALF (Term Asset Backed Loan Facility) plan successfully found buyers late in the trading session, allowing
GE, Volkswagen, Sallie Mae and others to gain much needed financing for their regular operations. The eagerly awaited details of the sale will be released at 5 pm EST and while the cost of the debt ranged as high as 6% above 1 month LIBOR for Sallie Mae, the auction provided confidence to investors who have been timid to invest in companies who have been unable to sell debt throughout the economic downturn of late.
Many have claimed that the results of the stress tests on TARP funded banks are "baked in" to equity prices, many question marks remain concerning the fiscal viability of participating firms and the U.S. financial market as a whole.
Keep a close eye on U.S. crude oil supply levels as well as mortgage applications data to be released on Wednesday, as these factors will compete with sentiment concerning the health of TARP banks and move markets throughout the trading day.
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