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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Qualified Opinion who wrote (76239)	7/31/2007 3:53:24 PM
From: Skywatcher	Read Replies (1) \| Respond to of 94695

Stocks Lose Steam on Subprime Worries Tuesday July 31, 2:57 pm ET By Madlen Read, AP Business Writer Wall Street Rally Fizzles As American Home Mortgage Problems Revive Subprime Anxiety NEW YORK (AP) -- Renewed concerns about soured home loans and the financial solvency of some lenders shot down a two-day recovery rally on Wall Street Tuesday, causing stocks to give up sharp gains and move lower. ADVERTISEMENT Early in the session, stocks had soared following strong earnings from General Motors Corp. and Sun Microsystems Inc. and amid somewhat mixed economic data. But stocks pulled back after American Home Mortgage Investment Corp. said Tuesday afternoon it hasn't been able to tap into its credit lines and has hired advisers to consider its options, including the sale of its assets. Wall Street has been concerned about tightening credit after some loans made to borrowers with poor credit have gone bad, and that anxiety contributed to the market's big plunge last week. "It seems like the rally that we've seen was based on the lessening of credit fears," said Denis Amato, chief investment officer at Ancora Advisors. "Anything that argues for higher (interest) rates and worsening credit conditions will be something that takes the air out of the market." In late afternoon trading, the Dow Jones industrial average fell 11.38, or 0.09 percent, to 13,369.69, after rising more than 120 points earlier. Broader stock indicators showed little change. The Standard & Poor's 500 index rose 1.08, or 0.07 percent, to 1,474.99, and the Nasdaq composite index slipped 4.13, or 0.16 percent, to 2,579.15. Bonds rose slightly after the mixed economic data. The 10-year Treasury note's yield stood at 4.81 percent, flat with the yield late Monday. Oil prices closed above $78 a barrel for the first time Tuesday on the New York Mercantile Exchange. The dollar rose against the euro but traded mixed against other major currencies. Gold prices edged higher. "Everyone is walking on pins and needles and with the gains that were behind everybody I think they're a little more susceptible to the bad news," Amato said, referring to the tenuous nature of the earlier rally. The session's earlier gains came after a mixed batch of economic reports. The Commerce Department's year-over-year core personal consumption expenditures -- a closely watched inflation measure -- rose 1.9 percent in June, within the Federal Reserve's comfort zone. The report also showed that personal spending last month inched up 0.1 percent, its slowest pace in nine months. And while a report from the Conference Board indicated that consumer confidence jumped to a six-year high, June construction spending dipped and the July Chicago purchasing manager's index indicated weaker-than-expected growth. The report is considered a precursor to the Institute for Supply Management's national manufacturing index, which will be released Wednesday. The market had received a boost from better-than-expected earnings from automaker GM and Sun Microsystems, which makes networking equipment. The stock market's gains Monday and more measured moves Tuesday follow last week's sharp pullback, which was fueled by persistent worries that a deteriorating lending environment will make it harder for companies to borrow money. As the market's turnaround Tuesday shows, investors should expect continued volatility, one observer noted. "The bottom line is volatility has picked up, and it's going to continue to pick up," said Jeff Schappe, chief investment officer at BB&T Asset Management, adding that there's potential for the market to drop another 5 percent. Last week, the Dow Jones industrial average tumbled about 5 percent from its record close of 14,000.41, reached earlier in July.