Saturday, 18 October 2008

Stocks fall but so does LIBOR

Stocks fell on Friday, as Bloomberg reports.

U.S. stocks fell, capping a day that sent the Standard & Poor's 500 Index swinging between gains and losses at least 28 times, as worsening consumer confidence and housing data overshadowed Warren Buffett's advice to buy shares...

The S&P 500, which rose as much as 4 percent, ended down 5.88 points, or 0.6 percent, at 940.55, trimming its best weekly advance since February. The Dow retreated 127.04, or 1.4 percent, to 8,852.22 to cap its best week since 2003. The Nasdaq Composite Index slipped 0.4 percent to 1,711.29. Four stocks fell for every three that gained on the New York Stock Exchange.

Despite the fall, the S&P 500 ended the week up 4.6 percent.

But perhaps more significantly, LIBOR also fell, both for the day as well as for the week.

The London interbank offered rate, or Libor, for three- month loans in dollars dropped for a fifth day, sliding 8 basis points to 4.42 percent, the British Bankers' Association said. It declined 40 basis points this week. The overnight rate for dollars slid 27 basis points to 1.67 percent, the lowest level since September 2004. Asian rates also fell...

Rates for one-month commercial paper fell to a three-week low. The average yields offered on the highest-rated commercial paper placed by dealers slid 48 basis points to 3.45 percent today, according to data compiled by Bloomberg. Rates dropped 83 basis points in the week to the lowest level since Sept. 26. Yields reached a nine-month high of 4.28 percent on Oct. 10.

In the meantime though, US economic data continue to come in negative.

The Reuters/University of Michigan preliminary index of consumer sentiment fell to 57.5 this month from 70.3 in September. The measure averaged 85.6 last year. Construction of single-family homes dropped 12 percent last month to a 544,000 annual rate, the Commerce Department said in Washington...

Starts on all residential properties, including condominiums, slid to a 817,000 annual pace, below all 74 forecasts in a Bloomberg News survey...

Building permits, a sign of future construction, dropped 8.3 percent to a 786,000 pace, matching the lowest level since November 1981.

And the annualized growth rate of ECRI's Weekly Leading Index fell to a 33-year low last week.

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