YAHOO[BRIEFING.COM]:Market
participants spent the session focusing on word the government may be close to
creating a "bad bank" that will purchase risky assets from existing
banks. Divesting risky assets would help banks protect against further asset
write-downs, and increase cash on their books. That would help limit the need
to raise additional capital, which can be dilutive to shareholders.
Helping financial companies restore their health is largely seen as
the first step in repairing the financial system and the broader economy. The
financial sector responded by gaining 13%, leading the broader market more than
3% higher.
Wells Fargo
(WFC 21.19, +5.00) provided the most support to the financial sector and the
broader market. It gained 31%, marking its best single-session performance
in months. Wells
Dow components Boeing
(BA 43.24, +0.02) and AT&T
(T 25.91, -0.02) traded as laggards after reporting unimpressive quarterly
results. WellPoint's
(WLP 44.50, +1.88) latest earnings were in-line with expectations. Yahoo! (YHOO 12.24, +0.90) and ConocoPhillips (COP 50.16, +0.65)
both topped earnings estimates. Yahoo, along with other large-cap tech names,
helped drive gains in the Nasdaq.
ConocoPhillips provided leadership to the energy sector, which was also helped
by a modest rebound in crude oil prices.
Crude finished the session roughly 1% higher, just above $42.00 per
barrel. Crude was actually down 2.4% in the wake of a larger-than-expected build in weekly inventories. That marked the fifth straight
build for weekly inventories.
In its first session of the new year, the
Federal Open Market Committee left its fed funds target rate unchanged at 0.00%
to 0.25%, as expected. The target rate is likely to remain at exceptionally low
levels and reflects the FOMC's view that the economy
remains weak. In turn, the Fed says its focus is to support financial
markets through open market operations and other measures.
The Fed also stated it continues to purchase large quantities of
agency debt and mortgage-backed securities. Such a move helps put cash back
into the system, and helps support the mortgage and housing markets. The FOMC
stated it is prepared to purchase longer term securities if evolving
circumstances indicate that it would be effective in improving conditions in
credit markets.
Statements from the FOMC and word that a bad bank plan may be in
order helped drive the stock market to its fourth straight gain. Stocks are up
roughly 5.5% during that time.DJ30 +200.72 NASDAQ +53.44 SP500 +28.38 NASDAQ
Adv/Vol/Dec 2114/2.16 bln/590 NYSE Adv/Vol/Dec 2686/1.55 bln/408