Wall Street showed its relief Monday over the government's plan to bail out Citigroup Inc. — a move it hopes will help address some of the uncertainty hounding the financial sector. Stocks jumped about 3 percent, extending Friday's big rally.
While the markets anticipated late last week that some sort of rescue was likely, investors appeared emboldened by the U.S. government's decision late Sunday to invest $20 billion in Citigroup and guarantee $306 billion in risky assets. The move by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. is only the latest effort this year to support a banking system troubled by bad debt and flagging confidence.
Besides implementing its $700 billion bailout plan for the overall financial industry, the government has bailed out insurance giant American International Group Inc. and taken over lenders Fannie Mae and Freddie Mac.
The market is also a little more optimistic because President-elect Obama is set to introduce his economic team on Monday and has called for another economic stimulus. His plan targets saving or creating 2.5 million jobs during the next two years. Any plan is expected to exceed the $175 billion Obama proposed during the campaign.
The moves by the government to once again step in and help a troubled bank as well as the broader economy helped buoy investor sentiment but investors remain cautious. The nation still faces a difficult economy and the stock market likely will continue to see volatility.
In midmorning trading, the Dow Jones industrial average rose 243.17, or 3.02 percent, to 8,289.59.
Broader stock indicators also jumped. The Standard & Poor's 500 index advanced 26.35, or 3.29 percent, to 826.38, and the Nasdaq composite index rose 41.31, or 2.98 percent, to 1,425.66.
The rise in stocks follows a rally Friday that saw the Dow industrials jump 494 points, or 6.5 percent. The other major indexes also rose sharply. Still, stocks ended the week with a loss after heavy selling Wednesday and Thursday.
Bond prices were mixed Monday as investors examined the government's bailout plan for Citigroup. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.29 percent from 3.20 percent late Friday.
The Treasury bill market showed continuing high demand, a sign of investors' caution. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.02 percent from 0.04 percent late Friday.
The dollar was mostly lower against other major currencies, while gold prices rose.
Wall Street shrugged off a larger-than-expected drop in sales of existing homes last month as investors instead focus on the government's rescue for Citigroup. And while the housing numbers fell short of expectations, Wall Street expected sales would fall sharply after last month's upheaval in the financial markets.
The National Association of Realtors says sales of existing homes fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million in October. That's down from 5.14 million in September.
Citi shares surged $2.18, or 58 percent, to $5.95 on word of the government's injection of capital into the company.
Health care company Johnson & Johnson said Monday it would acquire Omrix Biopharmaceuticals Inc. for $438 million. The move is aimed at expanding J&J's surgical product unit; J&J will pay $25 per share for the company, an 18 percent premium over Omrix's close Friday of $21.16.
J&J rose 54 cents to $58.89, while Omrix rose $3.41, or 16 percent, to $24.57.
Overseas, in afternoon trading Britain's FTSE 100 jumped 5.67 percent, Germany's DAX index rose 5.26 percent, and France's CAC-40 rose 5.24 percent. Hong Kong's Hang Seng index fell 1.59 percent; markets in Japan were closed for a holiday.
Monday, November 24, 2008
Obama Moves Economic Vision
Eager to calm economic anxieties, President-elect Barack Obama is rolling out an economic vision that will require congressional cooperation even before he settles into his new desk in the White House's Oval Office.
Obama will introduce his new economic leadership team Monday, a key step toward enacting a huge new economic recovery plan that aims to save or create 2.5 million jobs over the next two years.
The plan is likely to far exceed the $175 billion Obama proposed during the campaign. It would include an infusion of money for infrastructure projects, new environmental technologies and tax cuts for low- and middle-income taxpayers. It will not call for tax hikes for the wealthy.
Obama aides on Sunday called on the new Congress to pass by the Jan. 20 inauguration legislation that meets Obama's two-year goal of saving or creating 2.5 million jobs. Democratic congressional leaders said they would get to work when Congress convenes Jan. 6 with bigger Democratic majorities in the House and Senate.
Obama will introduce his new economic leadership team Monday, a key step toward enacting a huge new economic recovery plan that aims to save or create 2.5 million jobs over the next two years.
The plan is likely to far exceed the $175 billion Obama proposed during the campaign. It would include an infusion of money for infrastructure projects, new environmental technologies and tax cuts for low- and middle-income taxpayers. It will not call for tax hikes for the wealthy.
Obama aides on Sunday called on the new Congress to pass by the Jan. 20 inauguration legislation that meets Obama's two-year goal of saving or creating 2.5 million jobs. Democratic congressional leaders said they would get to work when Congress convenes Jan. 6 with bigger Democratic majorities in the House and Senate.
Wednesday, October 22, 2008
10 Steps to Retire a Millionaire
Having a million-dollar portfolio is a retirement dream for many people. Making that dream come true requires some serious effort. While success is never a sure thing, the 10 steps outlined below will go a long way toward helping you achieve your objective.
1. Set the Goal
Nobody plans to fail, but plenty of people fail to plan. It's a cliché, but it's true. "Plan" is the leading self-help advice from athletes, business moguls and everyday people who have achieved extraordinary goals.
2. Start Saving
If you don't save, you'll never reach your goal. As obvious as this might seems, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability.
If your employer offers to match your contributions up to a certain percentage, be sure to contribute enough to get the full match. It's like getting a guaranteed return on your investment. Finding the cash to stash may be a challenge, particularly when you're young, but don't let that stop you from pursuing future riches.
3. Get Aggressive
Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision. If you are looking to grow your wealth over time, fixed-income investments aren't likely to get the job done, and inflation can take a big chunk out of your savings.
Investing in equities entails more risk, but is also statistically likely to lead to greater returns. For many of us, it's a risk we have to take if want to see our wealth grow. Asset-allocation strategies can help you learn how to make picking the right mix of securities the core of your investing strategy.
4. Prepare for Rainy Days
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can't avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do.
5. Save More
Your income should rise as time passes. You'll get raises, you'll change jobs, and maybe you'll get married and become a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.
6. Watch Your Spending
Vacations, car, kids and all of life's other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are all necessities if you want to boost your savings.
7. Monitor Your Portfolio
There's no need to obsess over every movement of the Dow. Instead, check your portfolio once a year. Rebalance your asset allocation to keep on track with your plan.
8. Max Out Your Options
Take advantage of every savings opportunity that comes your way. Make the maximum contribution to tax-deferred savings plans and then open up a taxable account too. Don't let any chance to save get away.
9. Catch-Up Contributions
When you reach age50, you are eligible to increase contributions to tax-deferred savings plans. Take advantage of this opportunity!
10. Have Patience
"Get-rich-quick" schemes are usually just that - schemes. The power of compounding takes time, so invest early, invest often and accept that the road to riches is often long and slow. With that in mind, the sooner you get started, the better your odds of achieving your goals.
The Reality Of Retirement
Retirement might seem far away, but it when it arrives nobody ever complains about having too much money. Some people even question whether a million dollars is enough.
That said, with lots of planning and discipline, you can reach your retirement goals and live a comfortable life after work.
1. Set the Goal
Nobody plans to fail, but plenty of people fail to plan. It's a cliché, but it's true. "Plan" is the leading self-help advice from athletes, business moguls and everyday people who have achieved extraordinary goals.
2. Start Saving
If you don't save, you'll never reach your goal. As obvious as this might seems, far too many people never even start to save. If your employer offers a 401(k) plan, enrolling in the plan is a great way to put your savings on autopilot. Simply sign up for the plan and contributions will be automatically taken out of your paycheck, increasing your savings and decreasing your immediate tax liability.
If your employer offers to match your contributions up to a certain percentage, be sure to contribute enough to get the full match. It's like getting a guaranteed return on your investment. Finding the cash to stash may be a challenge, particularly when you're young, but don't let that stop you from pursuing future riches.
3. Get Aggressive
Studies have shown that the majority of the returns generated by an investment are dictated by the asset-allocation decision. If you are looking to grow your wealth over time, fixed-income investments aren't likely to get the job done, and inflation can take a big chunk out of your savings.
Investing in equities entails more risk, but is also statistically likely to lead to greater returns. For many of us, it's a risk we have to take if want to see our wealth grow. Asset-allocation strategies can help you learn how to make picking the right mix of securities the core of your investing strategy.
4. Prepare for Rainy Days
Part of long-term planning involves accepting the idea that setbacks will occur. If you are not prepared, these setbacks can put a stop to your savings efforts. While you can't avoid all of the bumps in the road, you can prepare in advance to mitigate the damage they can do.
5. Save More
Your income should rise as time passes. You'll get raises, you'll change jobs, and maybe you'll get married and become a two-income family. Every time more cash comes in to your pocket, you should increase the amount that you save. The key to reaching your goal as quickly as possible is to save as much as you can.
6. Watch Your Spending
Vacations, car, kids and all of life's other expenses take a big chunk out of your paycheck. To maximize your savings, you need to minimize your spending. Buying a home you can afford and living a lifestyle that is below your means and not funded by credit cards are all necessities if you want to boost your savings.
7. Monitor Your Portfolio
There's no need to obsess over every movement of the Dow. Instead, check your portfolio once a year. Rebalance your asset allocation to keep on track with your plan.
8. Max Out Your Options
Take advantage of every savings opportunity that comes your way. Make the maximum contribution to tax-deferred savings plans and then open up a taxable account too. Don't let any chance to save get away.
9. Catch-Up Contributions
When you reach age50, you are eligible to increase contributions to tax-deferred savings plans. Take advantage of this opportunity!
10. Have Patience
"Get-rich-quick" schemes are usually just that - schemes. The power of compounding takes time, so invest early, invest often and accept that the road to riches is often long and slow. With that in mind, the sooner you get started, the better your odds of achieving your goals.
The Reality Of Retirement
Retirement might seem far away, but it when it arrives nobody ever complains about having too much money. Some people even question whether a million dollars is enough.
That said, with lots of planning and discipline, you can reach your retirement goals and live a comfortable life after work.
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