Markets stage mild comeback
NEW YORK, March 3 (UPI) -- U.S. markets headed up Tuesday morning, following the previous session's knockdown which sent the Dow Jones Industrial average down 299 points.
The Dow closed at its lowest point in 12 years Monday, as economic uncertainties persist and bank's problems continue.
After Monday's fall, "we can finally make a case for equities being cheap," analysts at Deutsche Bank said. But, "given the magnitude of this crisis we may have to eventually see very cheap levels before we bottom," bank strategists told the Wall Street Journal.
In late morning trading, the DJIA after initially shooting up, fell back to a fractional gain of just 3.75 points or 0.06 percent to 6,767.04. The Standard & Poor's 500 was off 0.82 or 0.12 percent to 700.00. The Nasdaq composite index dipped 0.33 or 0.02 percent to 1,322.52.
The benchmark 10-year U.S. Treasury bond fell 22/32 to yield 2.92 percent.
The euro fell to $1.2561, compared to Monday's $1.2576. Against the Japanese yen, the dollar rose to 98.456 yen, compared to Monday's 97.43 yen.
In Tokyo, the Nikkei average lost 50.43 points to 7,229.72, down 0.69 percent.
Stocks signal prolonged recession
NEW YORK, March 3 (UPI) -- A global stock sell-off that sent U.S. markets tumbling signaled to many that the recession that began in December 2007 is not going away soon.
"People are really coming to terms with the fact that we not only have a global slump, but one that's going to be prolonged," Contango Capital Advisors Chief Executive Officer George Feiger said.
Billionaire investor Warren Buffett said recently the economy would be "in shambles" and not improve in the short-term, The Washington Post reported Tuesday. Large banks are still in disarray despite massive bailout programs. Manufacturing in the United States contracted for the 13th consecutive month in February, the Institute for Supply Management said Monday.
On the positive side, "the credit markets have healed some," said David Shulman, a senior economist with UCLA Anderson Forecast.
Consumer spending, which drives two-thirds of the U.S. economy, rose 0.6 percent in January, the Commerce Department said. U.S. incomes rose 0.4 percent.
Savings have risen, but savings are not spending, which economists say is vital.
Behind these gains, incomes were up, in part, because of a cost-of-living adjustment in Social Security. Spending was up in part because of rising gasoline prices, the Post said.
For government, temporary can mean forever
WASHINGTON, March 3 (UPI) -- At least a portion of two U.S. government sponsored mortgage giants will remain in public hands indefinitely, U.S. Rep. Barney Frank, D-Mass., said.
The Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association both fell into conservatorship last year after losing billions to mortgage write downs.
At the time, the promise was to strengthen Freddie Mac and Fannie Mae and return them to private operations, The New York Times reported Tuesday.
But, lawmakers may be loath to give up the leverage on the housing market and repaying the $400 billion plus interest needed to regain independence will take as long as a century, the Times said.
"Some of what these companies did will be returned to the private sector and some of it is going to remain with a public entity," said Frank, chairman of the U.S. House of Representatives Financial Services Committee.
The two firms' holdings include about half the bundled U.S. mortgage securities, giving them unparalleled leverage in the mortgage game.
When Freddie and Fannie make a move, other banks follow suit.
"Once government gets a new tool, it's virtually impossible to take it away," Rep. Scott Garrett, R-N.J., told the Times "And Fannie and Freddie are now tools of the government."
Citi extends break to unemployed borrowers
NEW YORK, March 3 (UPI) -- U.S. lender CitiMortgage said it would give a break to recently unemployed mortgage holders to keep them in their homes.
The company, which is the lending division for CitiGroup, said it would lower payments to as little as $500 a month for three months for homeowners receiving state unemployment benefits, CNN reported Tuesday.
"We're planning to help recently unemployed homeowners by giving them the ability to pay as little as $500 a month on their mortgage, which is effectively less than the price of an average one-bedroom rental nationally," said Sanjiv Das, CitiMortgage's president and chief executive officer.
"This is intended to keep the neediest borrowers in their homes," Das said.
"We hope to help thousands of customers with this."
