OTCPicks Market Blog

October 29, 2008

Feds Cut Interest Rate Half a Point

On Wednesday Oct 29, the Federal Reserve slashed a key interest rate by half a percentage point as it seeks to revive an economy rocked by the worst financial crisis in the better part of the last century. U.S. stocks dropped in the final minutes of trading on concerns that the Federal Reserve's sixth interest- rate cut this year isn't enough to rescue the economy.

The Standard & Poor's 500 Index lost 10.42 points, or 1.1 percent, to 930.09, one day after surging 11 percent. The Dow average slumped 74.16, or 0.8 percent, to 8,990.96. Three stocks gained for every two that fell on the New York Stock Exchange.

September 22, 2008

This past week has seen an unprecedented events happening on Wall Street and a major rollercoaster ride in the stock market. This past week shook the foundations of the world financial system. A sharp slide in U.S. housing prices and a subsequent rise in delinquencies on home loans is the root cause of these massive losses on mortgage-backed bonds that in recent years have spread across the global financial landscape.

The financial crisis that began 13 months ago has entered a new, far more serious phase. Hopes that the damage could be contained to a handful of financial institutions that made bad bets on mortgages have evaporated this past week. Now increasingly big cracks have appeared in the system beyond the original problem -- troubled subprime mortgages -- in areas like credit-default swaps, the credit insurance contracts sold by American International Group Inc. and others. This led to a crazy week last week on Wall Street:

September 17, 2008

In recent weeks mortgage rates have been dropping. This is great news for buyers, but only buyers with impeccable credit. Within the last week mortgage rates have dropped below 6% making it a great time to consider buying a house. But, the “Devil is in the Details” and the Devil in this case is finding a lender willing to loan you the money to buy.

Lenders do not want to take risk anymore. Taking excessive risk on sub-prime loans is what started this mess in the first place, so the pendulum is now swinging the other way where lenders have become very conservative and are requiring ever higher credit scores, larger loan down payments, and more stringent income verification checks.

September 15, 2008

Sunday, September 14th is already being called Black Sunday for Wall Street as troubled financial giants Lehman Brothers, Merrill Lynch and AIG were all desperately seeking lifelines for survival as frenzied behind-close-doors meetings happened around the clock. And today might well become Black Monday if the cloud of the current financial crisis does not lift.

U.S. financial stocks and markets are getting battered unmercifully today as worried investors react to the uncertainty and instability of the U.S. financial system happenings.