Closing Bell 10.24.07

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Sponsored by the Financial Times.
Equities: It was a whiplash day on the stock markets, as the major stock indexes made sharp reversals from gains in the first two days of trading this week and then rallied back to flat or nearly so in the last two hours of trading. “Trimming steep losses” and “well above the lows of the session” seem to be the favorite phrases of people who get paid to craft such sentences.
The Dow Jones Industrial Average was down a smidge, 0.98 points, or 0.01%, to close at 13675.25. The broader S&P 500-stock index fell further, 3.71 points, or 0.24%, to 1515.88. The Nasdaq Composite Index saw the nastiest day, losing 24.50, or 1.2%, to 2774.76. Volume climbed higher today as well, with the 1.59 million shares trading hands on the New York Stock Exchange. Sinkers beat climbers by a ratio of 2:1.2 on the NYSE.
Now a quick tour of some of the news that may or may not have driven part of today’s market action. Home resales declined, as did the median home price. People realized that there are no more Harry Potter books, and pushed Amazon prices lower. Merrill’s earnings showed it had the biggest losses from the subprime meltdown and credit crunch, gave more detailed disclosures of the losses than any other firm on Wall Street but didn’t satisfy investors with its conference call. The stock dropped dramatically after the call. Cablevision shareholders rejected a $10.6 billion offer from the Dolan family to take the company private. CEO James Dolan said he was "disappointed" by the vote. A Cablevision employees who spoke to DealBreaker on the condition of anonymity said “Yay!” After the closing bell, Microsoft admitted that it is investing $240 million for a minority stake in Facebook, which values the site at $15 billion.
Federal Reserve. With the last of the Wall Street earnings reports behind us, a lot of the babble bubbled about the depth and timing of a rate cut from the Federal Reserve. Nearly everyone seems to agree that another cut is coming because the credit, financial and housing markets still aren’t behaving the way the Federal Reserve would like them to. The questions are now how deep will the cut come. Some, like former Fed honcho Wayne Angell are calling for the Fed to cut rates down to as much as 3.5%. Others are speculating about a cut before next weeks meeting, either in the discount window or in the fed-funds target rate.
Bonds and Credit. U.S. Treasuries rallied, sending the two-year Treasury note's yield to its lowest level since September 2005. The Treasury sold $20 billion of new two-year notes but the market didn’t seem to notice. Foreign central banks and other indirect bidders bought only about 22 percent of the sale. That’s below the average for such things, and a possible indication that demand for the debt of the US government is sinking with the dollar.
The two-year note traded up 5/32 in price for a yield of 3.73 percent . The 10-year note added 17/32, for a yield of 4.347%. The 30-year bond was up 27/32, yielding 4.646%.
The offering for TXU debt was said to be "massively oversubscribed" today. The underwriters succeeded in placing $7.5 billion of low-rated debt, making it the the largest U.S. junk bond sale ever.
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