May 20, 2009
May 20, 2009 by admin
The stock market is looking to recover from Tuesday’ sell off. This is a week that is light on major economic news and investors are turning their attention to news from major corporations as they move in and out of equity positions. The stock market appears to be headed for positive territory on Wednesday thanks in large part to some positive news released from Bank of America.
Bank of America, which is one of the nations three largest banks, and second largest mortgage lender announced they have been successful with there common stock offering and have raised over thirteen billion dollars in capital over the past two weeks. The influx of capital was needed to help bring the companies balance sheet back to standards set forth by the recent government stress tests. The announcement of the capital raise is another dose of good news for the finance markets which are continuing to rally upward. The stock market has been under pressure over the past two weeks from banks and corporations that have tendered stock offerings to raise working capital. The additional funds will help to strengthen corporate balance sheets and may be a key ingredient to help restore lending and corporate hiring over the next twelve months.
The economy could begin to feel a pinch from the rise in oil prices. The price of oil is now above $60 per barrel and the average gallon of gasoline is well above $2 nationally. These numbers are considerably lower than they were one year ago at this time, but the incremental increases with prices are likely to begin pinching consumer budgets sooner rather than later. The lower energy prices are one of the key reasons the economy has been able to weather the economic storm over the past six months as the lower gas prices help consumers reallocate funds for savings and purchases.
Mortgage rates have trended upward this week. Fixed rate mortgage loans have risen by .125 to .25 %. The yield on the ten year bond is now at 3.24%. Fixed mortgage rates for most thirty year loans with national mortgage lenders will be at or above 5% unless the borrower is willing to pay points to buy down the rate. Mortgage rates have been holding within a steady range of 4.875% to 5.375% over the past six months and there is little reason to see a significant jump up or down in the near future.