Bank of America Close to Buying Countrywide Financial
January 10, 2008
(Long Island, N.Y.) In an effort to assist a struggling U.S. economy, preliminary talks have begun about cutting interest rates even further to help the economy. Immediately thereafter, the Stockmarket responded by advancing for the second day in a row.
The DJIA was up by +117.78 or 0.92% to 12,853.89, NASDAQ at +13.97 and S&P 500 by +11.20 at the close of the days trading. The rise in the market could be attributed to two factors in the business and financial sector. First, the planned cutting of the interest rates; second, the report that Bank of America Corp. was close to buying America’s largest but struggling mortgage lender: Countrywide Financial Corp. Both of these reports prompted a temporary yet welcoming upsurge in the markets and might be a starting point in somewhat resurrecting the economy.
“For the last month, rumors are that Countrywide was going into bankruptcy,” said Ryan Larson, senior trader at Voyageur Asset Management. “Any deal with Bank of America is good news, and the market is looking for even a hint of good news these days.” Credit reasons were one of the primary reasons that the market wavered beginning late last year with the Mortgage Meltdown, but a sudden confidence has injected into investors.
Stocks surged after Bernanke announced that the Feds are cutting down interest rates again to ward off recession. “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” Bernanke said.
The temporary rise in the stock market in the last two days of volatile trading is a sign that the struggle we’ve seen opened up this New Year could taper off. Anthony Conroy, managing director and head trader for BNY ConvergEx Group, said that while the Fed comments move the market in the short-term, “for the next couple of weeks, though, take a hard look at earnings.” Though Wall street is concerned that it might take more than a cut in the interest rates to stabilize the economy, experts are optimistic however that this might be a step in the right direction and possibly help the U.S. achieve some economic growth in what looked like a very shaky 2008.
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