News You Can Use from Gary Moore

Weekend Market Update

Jan. 23-24, 2010

The stock market suffered its worst setback in more than 10 months this week, and mortgage interest rates stayed low as money moved to Treasuries and mortgage-backed securities.

Stocks have had their worst showing since they began their recovery last March. The market also is seeing the kind of volatility that dominated the market's long slide -- the Dow has had a triple-digit move five straight days for the first time since December 2008.

The Dow lost 4.1 percent this week, its worst week since it hit a 12-year low in early March. It had reached its highest level since Oct. 1, 2008, only this past Tuesday, closing at 10,725.43. On Friday, it closed at 10,172.98.

The markets were rattled on Thursday after President Obama asked Congress to limit the size of big banks and to end to some of the risky trading large financial companies have used to boost their profits. When the TARP program was hustled in during the final days of the Bush presidency, Americans were told that some institutions were "too big to fail." While taxpayers provided a safety net for the massive, for-profit corporations, those companies are now larger than before, due to consolidation and takeovers in the industry.

President Obama is also seeking to reign in high-stakes, high-risk derivative trading which sparked the 2008 economic crisis as the big banks choked on their bad bets.

There is more uncertainty for the markets next week and not just because more earnings reports will arrive. The Fed holds its first meeting on interest rates of 2010. No one expects the central bank to boost rates, but investors will be looking for the Fed's take on the economy.

Ben Bernanke, whose term as Federal Open Market Committee chairman ends Jan. 31, is still waiting for the Senate to confirm his reappointment to another term. A growing number of senators are blaming the Fed chairman for the nation's economic problems.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 3.59 percent from late Thursday.

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(0% points, 1% origination, subject to program and lock period. Market Update informs on market trends and is not a quote for a unique borrower.)