Welcome to Finance World

German consumer confidence unexpectedly rose for a third month, defying the recession.

GfK AG’s index for December, based on a survey of about 2,000 people, increased to 2.2 from 1.9 in November, the Nuremberg-based market-research company said in a statement today. Economists expected the gauge to drop to 1.5, according to the median of 24 estimates in a Bloomberg News survey.

Inflation slowed in October and the price of oil has dropped to $53 a barrel from a July peak of $147, boosting households’ disposable income. At the same time, the deepening crisis on financial markets and the worst recession in 12 years is clouding consumers’ outlook for the economy, GfK said.

“Many Germans don’t yet believe they will be significantly affected by the downturn,” GfK said in the statement. Still, a further improvement would “very much depend on how deep the recession is and how the labor market will be affected.”

Declining heating oil and fuel costs and “the expectation that gas prices will follow suit” is increasing households purchasing power, “giving them room to spend.”

Household consumption rose 0.3 percent in the third quarter from the second, when it declined 0.6 percent, the Federal Statistics Office in Wiesbaden said today.

A measure of consumers’ propensity to buy surged to minus 6.7 from minus 18 business card design.2. Income expectations rose to minus 6.9 from minus 12.9. A gauge of economic expectations slid to minus 30.1 from minus 27.5. That’s the lowest since 1991, GfK said.

The worst U.S. housing slump since the Great Depression has pushed up the cost of credit globally and caused stock markets to tumble. The world’s biggest financial companies have incurred almost $1 trillion in writedowns and credit losses since the start of last year after the subprime mortgage market collapsed.

Business Confidence Slump

Companies such as BASF SE, the world’s largest chemicals maker, and carmakers Bayerischer Motorenwerke AG and Daimler AG are scaling back output as orders dwindle. Business confidence slumped to the lowest level in 16 years the Munich-based Ifo institute said yesterday.

Chancellor Angela Merkel’s government has also taken steps to shore up the economy. On Nov. 5 it agreed on a stimulus package aimed at unlocking 50 billion euros ($63 billion) in investment. The two-year program ranges from tax breaks for buyers of new cars to greater financial help for improving buildings’ energy efficiency.

Merkel is now facing growing pressure from members of her party, the Christian Democratic Union, to reduce income taxes to boost consumer spending.

Source

Tembec Inc. reported a quarterly loss Wednesday and warned that it would stay under pressure due to low lumber prices.

The Canadian forest products company said it lost $4 million ($3.2 million), or four Canadian cents a share, in its fourth quarter, compared with a profit of $22 million, or 25 Canadian cents a share, in the same period last year.

Revenue for the quarter was $629 million, down 6.8 per cent from $675 million in the year-before quarter.

Analysts were expecting an average loss of 9 Canadian cents a share before items, according to Reuters Estimates cash loan in one hour.

The company said the low U.S. dollar lumber prices it has experienced over the last several quarters have depressed results and that it expects this to continue as the slumping U.S. housing market saps demand for lumber.

Tembec shares, which closed at $1.31 on Tuesday, have dropped 9 percent in the last year.

Source

WASHINGTON—U.S. President George W. Bush said today 20 world leaders gathered here had agreed on a set of principles aimed at stabilizing the global economy and preventing future financial meltdowns.

But the outgoing president stressed in a statement that today’s historic meeting was the first in a series and he would now hand over the process to President-elect Barack Obama.

Emphasizing the need for a smooth transition, Bush wrapped up his statement at a historic downtown Washington conference centre by thanking journalists for covering his summit and ended with a simple, "Good-bye."

Today’s meeting was historic because of the attendance of 20 nations, including developing countries which had been shut out of recent economic summits.

The leaders agreed to strengthen transparency and accountability by toughening disclosure requirements on international financial transactions, requiring "complete and accurate" disclosure by firms of their financial condition and aligning incentives throughout the nations to avoid any excessive risk-taking which could cause problems to cascade worldwide.

The leaders will strengthen the oversight of credit rating agencies and financial markets, toughen their financial market regulations to prevent market manipulation and fraud, more closely co-ordinate national laws and financial regulations and modernize the International Monetary Fund and the World Bank to give more power to the developing nations at the table here.

He said the international financial institutions were still operating based on the economy of 1944, and their policies need to be updated for today’s global economy.

That was a reference to the 1944 Bretton Woods conference which established both institutions.

Bush reiterated that he was a "free market person” but not when he is told his country could have been entering a depression deeper than the Great Depression.

He also said the leaders found consensus on trade barriers, agreeing that they would resist the urge to build economic walls and retreat into protectionism.

"It makes sense to come out of here with a firm action plan, which we have, and it also makes sense to say to people that there is more work to be done, and there will be more meetings," Bush said.

One meeting, he said, cannot turn the global economy around.

"The declaration should give us all hope, and I would hope would give the markets some reassurance," Prime Minister Stephen Harper told a news conference, referring to the so-called G20 countries’ communique following the end of their emergency summit.

Canada is in relatively good shape compared to other nations as it heads off the crisis, and will issue a financial update at the end the month.

The International Monetary Fund recently forecast that the Canadian economy will grow moderately over the next year and avoid falling into a recession.

Nonetheless Harper sounded a cautious tone Saturday as he addressed the media at the Canadian Embassy.

"There are going to be very tough adjustments that will have very real effects in the Canadian economy but we will continue to be pragmatic and flexible while maintaining good, long-run economic policies," said the prime minister, flanked by Finance Minister Jim Flaherty and Ambassador Michael Wilson.

"We will respond in a way that will minimize Canadians’ exposure to these problems and maximize our ability to come out of this in a strong position creditscore.com."

The G20 leaders, who meet again April 30 left Washington armed with a series of reforms to put in motion by the end of March.

"The big question is how do we establish good regulatory structure without destroying the incentive to innovate, without destroying the marketplace," Bush said Saturday outside the stately National Building Museum where the summit was held.

"Transparency is very important so that investors and regulators are able to know the truth."

Adding that the summit "is not going to solve the world’s problems," Bush said: "There is more work to be done."

Bush called for the emergency summit a few weeks ago in the face of the worldwide economic meltdown. It’s the largest meeting of its kind in more than a decade.

The meeting comes at an awkward time for Bush, a wildly unpopular lame-duck president who’s leaving office in two months when Obama is officially sworn in as America’s 44th president.

Obama has made it clear since his historic election Nov. 4 that Bush is still the president, and must remain actively involved in dealing with the crisis in the next few weeks.

Nonetheless, many of the officials who descended upon Washington for the summit had been clamouring for access not to Bush and his people but to the man who holds the real power in the U.S. capital – Obama.

The president-elect appointed two emissaries – one-time secretary of state Madeleine Albright and former Republican congressman James Leach – to attend on his behalf, reluctant to be seen as interfering during the waning days of Bush’s presidency.

Senior Canadian officials met with Albright and Leach early Friday, hours before Harper arrived in Washington to attend the extravagant White House dinner that kicked off the summit.

While the prime minister is opposed to a vast international regulatory system that would impose global rules on each country’s banking systems, he has strongly advocated the notion of "peer review" of every G20 country’s national financial regulations.

Harper said he was pleased to see that idea was embraced at the summit.

"There is an agreement to look at transparent assessments – independent transparent assessments – of financial regulatory systems, so that will happen," said Harper.

"Canada submitted to IMF assessments in the past, and as we told our American friends and others, we found those very useful in the past … so that has been recognized in the declaration."

Not far from the summit, a handful of protesters carried neon yellow signs that read: "Money for people’s needs, not bankers’ greed" and "Money for jobs, not for war and occupation."

The countries represented at the summit were the U.S., Canada, Argentina, Australia, Brazil, Britain, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

Those countries and the European Union make up the so-called G20.

Source

North American stock markets were awash in red as commodities prices continued to decline and electronics retailer Best Buy diminished optimism for U.S. investors when it issued a profit warning.

Toronto's S&P/TSX composite index fell 170.90 points in early trading to 9,253.10, after falling 264.80 points on Tuesday.

The TSX energy sector slipped 2.9 per cent as the price of crude oil continued to fall. Light sweet crude for December delivery was down $2.01 at US$57.32 a barrel on the Nymex.

The gold sector was down 4.5 per cent as the price of bullion fell $8.50 to US$724.30 an ounce on the New York Mercantile Exchange.

On Wall Street, the Dow industrials were down 191.55 to 8,502.41 after falling 177 points Tuesday. The Nasdaq composite index lost 29.15 to 1,551.75 while the S&P 500 declined 17.69 to 881.26.

The TSX diversified metals sector slid 10.6 per cent. Teck Cominco Ltd. (TSX: TCK.B) dropped another seven per cent, or 64 cents, to $8.11. On Tuesday, Teck said that contrary to rumours, it is not planning a stock offering to raise money to pay debt.

The Canadian dollar dropped to 82.21 cents, down 1.37 cents from Monday's official close, before Tuesday's Remembrance Day bank trading holiday.

Finance Minister Jim Flaherty says the federal government will purchase another $50 billion in residential mortgages to ease the credit crunch facing Canadian banks. It follows a similar move last month to purchase up to $25 billion in mortgages.

Retailers continued to erode optimism around the start of the holiday shopping season. Consumer electronics seller Best Buy Co. says it is cutting its 2009 guidance on fears that consumer spending will erode even further.

Department store operator Macy's Inc. says it lost $44 million in the third quarter. U.S. investors are worrying that a severe pullback in consumer spending – which drives more than two-thirds of the U payday advance services.S. economy – will prolong a global economic slump.

ING Canada Inc. (TSX: IIC) reported a third-quarter profit drop to $57 million from year-earlier $92 million due to stock market volatility. Shares were down 23 cents to $31.60.

Research in Motion (TSX: RIM) debuted its latest challenge to Apple Inc.'s iPhone – the BlackBerry Curve 8900 smart phone, as its shares dropped 93 cents to $53.98.

Fears are growing for General Motors Corp. and the North American-based auto industry in general, with Michigan Gov. Jennifer Granholm calling for quick federal action to help the Detroit Three. Granholm says Washington has thrown $700 billion into the rescue of the financial sector, and the carmakers are "just asking for a fraction of that."

President-elect Barack Obama urged President George W. Bush on Monday to support aid for the struggling automakers. And House Speaker Nancy Pelosi says she's confident Congress would approve “emergency and limited financial assistance" for the industry under the $700-billion bailout measure passed in October.

Treasury Secretary Henry Paulson gives an update on the government's financial rescue package later this morning (at 10:30 a.m. ET).

Overseas, London's FTSE 100 index was down 0.48 per cent in afternoon trading in London. The German DAX fell 2.1 per cent and the Paris CAC-40 lost 1.2 per cent.

The Bank of England predicted inflation will fall below the government's target of two per cent next year as the economy contracts. This raised expectations that the British central bank will lower its benchmark rate – possibly to the lowest level ever.

Japan's Nikkei index closed down 1.3 per cent and Hong Kong's Hang Seng declined 0.7 per cent.

Source

Industrial production in France and Italy fell in September as signs that both economies are already in recession slammed their auto industries.

In France, the euro-area's second-largest economy, output dropped 0.5 percent from August, the Paris-based statistics office said today. Italy's industrial production fell 2.1 percent from August, the most in almost 10 years, said a separate report from the national statistics office in Rome.

Both economies contracted in the second quarter, hurting sales at manufacturers such as Fiat SpA and PSA Peugeot Citroen. Growth in both countries will lag behind the euro-area average this year, the European Commission forecast Nov. 3, as the credit crisis saps corporate borrowing and erodes consumer and business confidence.

France probably slipped into its first recession since 1993 in the third quarter, according to Insee, the national statistics office, and the Bank of Italy forecast that the Italian economy shrank last quarter after contracting 0.3 percent in the three months through June. Preliminary estimates for third-quarter gross domestic product for both countries will be released Nov. 14.

The decline in Italian and French output mirrored a drop in Germany, Europe's biggest economy, where production declined 3.6 percent in September, a Nov. 7 report showed.

Car Production

“The global environment is uncertain, the financial crisis is deepening and reaching the real economy,'' said Olivier Bizimana, an economist at Credit Agricole SA in Paris.

Output in both countries was hurt by slumping automobile sales Faxless pay advances. From a year earlier car production dropped 8.3 percent in France and 12.8 percent in Italy, today's reports showed.

Auto sales in Italy fell for a 10 month in October, the worst run since 1993, as concern about a recession and a reduction in government incentives to replace older models deterred buyers. The pace of the decline forced Italy's biggest manufacturer, Fiat, to suspend some production in Italy and temporarily lay off workers. The company may revise its financial goals for the first time since Chief Executive Sergio Marchionne brought the carmaker back to profit in 2005.

PSA Peugeot Citroen, Europe's second-biggest carmaker, cut its full-year earnings target and said production will be slashed 30 percent following a “collapse'' in the global market. Renault SA closed its Sandouville plant in northern France for seven days because of weak sales of its Laguna mid- sized car and plans to seek 4,000 voluntary retirements in its program to cut costs.

“The economic crisis will hit not only the automakers, but also suppliers and dealers, which in Italy employ some 300 thousand people,'' Massimo Falcioni, director of the Italian unit of the world's largest credit insurer, Euler Hermes, said in an interview with Bloomberg Television on Nov. 6. “We expect that the worst part of the crisis will be in the second quarter of 2009.''

Source

North American markets ended yesterday in positive territory as investors shook off disappointing employment figures and went hunting for stock deals.

Toronto’s S&P/TSX composite index rose 40.80 points to close at 9,596.21, capping off another turbulent week of triple-digit swings in both directions.

But the index ended the week more than 1 per cent lower as lingering sentiment about deeper economic problems next year partnered with a further shift lower in oil prices.

The TSX energy sector fell 1 per cent as the price of crude ended down 10 per cent from a week earlier, with the near-month light sweet crude contract closing the session up 27 cents at $61.04 (U.S.) a barrel.

The mining index headed the advance by climbing 6 per cent as Sherritt International Corp. increased 7 per cent, or 23 cents, to $3.41.

The TSX Venture Exchange moved up 1.72 points to 921.85.

The Canadian dollar closed up 0.26 of a U.S. cent to 84.18 cents.

Buyers returned to Wall Street markets after two dismal days.

The Dow Jones industrial average climbed 248.02 points to 8,943.81. The Nasdaq composite index rose 38.70 to 1,647.40 while the S&P 500 moved up 26 american cash advance.11 to 930.99.

Bad news piled up from the auto industry, with General Motors Corp. reporting a $2.5 billion loss in the third quarter, or $4.45 a share.

Ford Motor Co. reported a third-quarter net loss of $129 million as it burned through $7.7 billion in cash. Ford also said it is cutting 10 per cent of its North American salaried workforce.

German automaker Daimler AG said its global sales in October slid 18 per cent from a year earlier.

Although the day’s news was worse than expected, investors were drawn by prices beaten down the past two sessions.

"We’re coming off of a very oversold market that had already braced itself for bad news out of Detroit and certainly bad economic data in terms of the labour report," said Peter Cardillo, chief market economist at Avalon Partners.

On the TSX, gold stocks were ahead 4.9 per cent.

The bullion contract for December moved ahead $2 to $734.20 an ounce – ending the week up 2.2 per cent.

Source

DETROIT — Detroit automakers and their allies in Congress said Wednesday that Barack Obama’s victory could help U.S. automakers line up federal funding needed for them to survive a terrible economic slump.

Obama made it clear during his campaign that he understood the automakers’ problems and would work to preserve the industry, U.S. Sen. Carl Levin, D-Mich., said Wednesday.

"I’m very optimistic that we’re going to have a fighter in the White House for manufacturers, and that’s what we need," Levin said.

Levin said he was told Wednesday by Jason Furman, Obama’s senior economic adviser, that government aid is atop Obama’s agenda. Levin said the Obama adviser did not commit to a specific funding path for the industry but was supportive.

Obama has said he would meet with industry leaders and the United Auto Workers immediately to talk about helping automakers, but auto industry officials said a meeting had not yet been scheduled.

Levin noted that Obama expressed support for doubling an Energy Department loan program for automakers to develop fuel-saving technology to $50 billion from $25 billion.

The senator said he and members of Michigan’s congressional delegation would pursue several funding options to help the industry, including the $700 billion Wall Street bailout or access to capital from the Federal Reserve.

Obama’s victory over Republican John McCain came just three days before General Motors Corp. and Ford Motor Co. are to release their third-quarter results, which almost certainly will show billions in losses and cash burn rates that will push the companies closer to emptying out their treasuries if auto sales don’t bounce back soon.

Further cuts by both automakers are expected on Friday, and GM’s top executives sent an e-mail to other executives Wednesday saying "important changes" will be announced just after the quarterly results are made public payday advance loan.

Spokesman Tom Wilkinson called the announcement a routine update. The e-mail did not give specifics, and Wilkinson said he could not comment on them.

Industry analysts expect GM and Ford to make further factory job cuts to match an ever-dwindling U.S. market.

Analysts say GM could close more plants, but Ford said it likely will do temporary factory shutdowns and overtime cuts at some of its car plants.

GM is talking with Chrysler majority owner Cerberus Capital Management LP about GM acquiring Chrysler. GM reportedly is after Chrysler’s roughly $11 billion cash stockpile and is seeking federal aid to make the deal happen.

Automakers and their congressional allies say some sort of government funding is necessary to bail out the troubled industry. They have been lobbying to speed up loans from the $25 billion Energy Department pot (the department late Wednesday said it planned to distribute the money by the end of the year), and for access to part of the $700 billion Wall Street bailout plan and perhaps other funding.

"What we need is to make sure that a vital industry like autos … which is such a big part of the overall economy, doesn’t lead us into a deeper and harsher downturn," Cerberus Chairman John Snow said Wednesday in an interview on CNBC. "The collapse of the auto industry at this time would be devastating for a new president."

Source

When people make sacrifices in a tough economy, they usually don’t start with their health.

That’s one reason the health care industry, if not exactly recession-proof, seems one of the best able to endure the economic downturn.

St. Louis’ growing medical sector includes the area’s largest employer, BJC HealthCare, with 23,500 workers. Not only are local hospitals not experiencing layoffs, many will continue to hire skilled workers, said Dave Dillon, spokesman for the Missouri Hospital Association.

"There’s always going to be a demand for health care," Dillon said.

During economic downturns, sales of prescription drugs and medical devices tend to hold up better than nonessential goods, noted David Wyss, chief economist of Standard and Poor’s.

"Generally, you’re looking for things that are necessities, not luxuries," Wyss said. "People get sick and need medical care regardless of the state of the economy."

But recent earnings show that drug makers aren’t immune from slumping sales that have plagued their peers in the retail and auto industries. Pfizer, which employs 1,200 people in its labs in the St. Louis area, said last month that U.S. sales of its best-selling product, the cholesterol drug Lipitor, fell 13 percent in the last quarter as some financially struggling patients stopped filling their prescriptions.

"The typical safe harbors (for investors) have been pharmaceuticals," said analyst Steve Brozak of WBB Securities. "They’re no longer safe; they’re now the least bad choice."

Pfizer and Schering-Plough Corp. were able to offset weak revenue in the U.S. with higher sales abroad. But other companies, such as Merck & Co. Inc., have been less successful. Merck said recently it will cut 7,200 jobs after reporting sales declines.

Experts say pharmaceuticals are more vulnerable to economic cycles because employers have shifted more of the financial burden for care to patients, with higher copays and deductibles.

"With consumers having more cost-sharing in their benefits, you’re going to see a greater effect on their health care spending right away," said Paul Ginsburg, President of the nonprofit Center for Studying Health System Change quick pay day loan.

That means more uninsured or under-insured patients seeking care through hospital emergency rooms and other safety-net providers. Between 2000 and 2005, 125,000 people in Missouri went off employment-based health insurance, said James Kimmey, president and CEO of the Missouri Foundation for Health.

"If the recession leads even more employers to back down a bit from their current coverage levels, it could increase the uninsured pretty fast," Kimmey said.

The lagging economy and rising unemployment have made it harder for health insurers such as UnitedHealth Group Inc. and Humana Inc. to raise prices to offset higher costs and investment losses.

Health care companies least affected are those that sell inexpensive medical products directly to hospitals, bypassing cash-strapped consumers.

Becton, Dickinson & Co. and Baxter International Inc., for example, reported sharp profit gains for the most-recent quarter and boosted their full-year earnings estimates. Becton Dickinson specializes in syringes and surgical tools; Baxter sells drugs to treat blood and immune disorders.

"The products they offer aren’t high-tech things," said Aaron Vaughn, an analyst with Edward Jones. "They are health care staples that people need."

A focus on lifesaving medicine also is expected to reward makers of high-priced biotech drugs.

Genzyme Corp. and Celgene Corp., for example, have built businesses around niche drugs for life-threatening diseases. Health care investment firm Leerink Swann gives both companies an "outperform" rating, along with peers Amgen Inc., Biogen Idec Inc. and Gilead Sciences Inc.

POST-DISPATCH STAFF WRITER BLYTHE BERNHARD CONTRIBUTED TO THIS REPORT.

Source

Australia cut interest rates sharply on Tuesday, presaging expected reductions in Europe later this week, and EU leaders pressed for an overhaul of global market rules.

For investors, the worst financial crisis in 80 years has all but eclipsed Tuesday’s U.S. presidential election although the result may offer some relief with the promise of more fiscal stimulus.

Whether Democrat Barack Obama or Republican John McCain wins, he will face a huge challenge in reviving the world’s largest economy, which is already contracting.

Australia’s bigger-than-expected 75 basis point rate cut followed cuts in the United States, China and Japan last week. Britain and the euro zone are expected to follow suit on Thursday with half point reductions, or maybe more.

The recession that authorities have tried to temper with trillions of dollars in bank bailouts, cash thrown into money markets and economic pump-priming measures, looms ever larger.

Australia’s central bank said there was “significant weakness” in major economies in explaining why it cut rates to 5.25 percent, the lowest since March 2005.

“Each of the big developed economies now is either in a severe recession or well on the way,” said Rory Robertson, interest rate strategist at Macquarie in Sydney.

EU REFORM CALL

European Union finance ministers, meeting in Brussels, backed proposals from the bloc’s French presidency for reforming oversight of global capital markets cash till payday advance.

The proposals feed into a summit of EU leaders on Friday to prepare for a world leaders gathering in Washington on November 15, which the president-elect is expected to attend.

German Chancellor Angela Merkel demanded world leaders agree quickly on new rules for financial markets. “It mustn’t take years, it must be done in months,” she said in Berlin.

There is increasing evidence of a severe economic downturn.

Japan’s economy has joined much of the developed world in a recession, economists polled by Reuters say, with GDP seen contracting for a second consecutive quarter as the financial crisis hits exports and capital investment.

Underscoring slowing sales in the car sector, Germany’s BMW abandoned its 2008 earnings forecast and cut production after a 60-percent plunge in quarterly profit.

The woes facing the world’s biggest premium brand automaker followed the worst month in 25 years for the industry in the United States, BMW’s largest market, including big setbacks for General Motors and Ford. 

Read more

Stocks rallied Thursday, as investors cheered news of easier credit and a report showing the economy shrank at a slower pace than expected in the third quarter.

The Dow Jones Industrial average (INDU) gained 190 points, or 2.1%. The Standard & Poor’s 500 (SPX) index rose 2.6% and the Nasdaq composite (COMP) gained 2.5%.

All three major gauges had been higher in the early going, but the buying momentum eased a bit as the session wore on.

Stocks seem to be in the process of putting a bottom in place, said Gary Hager, founder and chief executive of Integrated Wealth Management, citing the recent bear market lows hit on Oct. 10.

Looking forward, he said "We’re still going to see significant swings, but the volatility should start to decrease once we get past the election and get through the end of the year."

Rate cuts: Stocks zigzagged Wednesday after the Federal Reserve cut interest rates, as expected, and also issued a dour assessment of the economy. The central bank cut the fed funds rate, a key bank lending rate, by half a percentage point to 1.0%. That matched an all-time low for the rate last seen in June 2004.

In its statement, the central bank painted a bleak picture of the economy, touching on the lingering impact of the financial market crisis, the lack of available credit, and the erosion in consumer and business spending. The statement indicated the Fed could cut rates again if necessary.

But world markets rallied on the news, with Asian exchanges surging overnight and European markets up at the close. Hong Kong and Taiwan cut interest rates Thursday following the actions by the Fed, and by China earlier Wednesday. Speculation mounted that Japan would cut its key rate at a meeting this Friday.

The Fed has cut rates for more than a year in an attempt to help the struggling economy. The central bank has also made potentially trillions available to financial institutions as part of a broader attempt to calm roiling financial markets and get banks to start lending to each other again.

Lending has been improving slowly. On Thursday, the Fed said that the market for commercial paper grew last week, the first such expansion in nearly two months. Commercial paper is a critical form of short-term funding that companies rely on for their daily operations.

Lending rates: The credit market continued to improve, with Libor, the overnight bank-to-bank lending rate, falling to 0.73% from 1.14% Wednesday, according to Bloomberg.com. The 3-month Libor fell to 3.19% from 3.42% Wednesday. (Full story)

The TED spread, the difference between what banks pay to borrow from each other for three months and what the Treasury pays, narrowed slightly to 2.82% from 2.84% Wednesday. The spread hit a record 4.65% earlier this month. The narrower the spread, the more willing banks are to lend to each other.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, slipped to 0.4% from 0.57% late Wednesday, with investors preferring to take a piddling return on their money than risk the stock market.

Last month, the 3-month yield reached a 68-year low around 0% as investor panic hit its highest level.

Treasury prices slipped, raising the yield on the benchmark 10-year note yield to 3.97% from 3.85% late Wednesday. Treasury prices and yields move in opposite directions.

GDP: Gross domestic product, the broadest measure of the nation’s economy, fell at an annual rate of 0.3% in the third quarter after growing at a 2.8% rate in the second quarter.

The drop was not as bad as expected, with analysts having forecast that GDP would slump 0.5%. However, the decline was still the worst performance for the economy since the last recession 7 years ago. (Full story)

Company news: Exxon Mobil (XOM, Fortune 500), the oil services giant, reported a profit of $14.83 billion, the biggest quarterly profit in U.S. history. Shares rose modestly. (Full story)

But Exxon was an exception. With roughly 59% of the S&P 500 results out, profits are currently on track to have fallen 23.8% versus a year ago, according to the latest data from tracking firm Thomson Reuters.

Hartford Financial Services (HIG, Fortune 500) tumbled 51.6% after the life insurer reported a massive quarterly loss and also cut its full-year profit forecast.

Motorola (MOT, Fortune 500) warned that fourth-quarter profit would miss forecasts and said its troubled cell phone unit will continue to weaken next year. As a result, the company will delay its planned spinoff of that unit freecreditreport. The company will also cut 3,000 jobs as part of a restructuring. Motorola shares fell 5.3%.

Avon Products (AVP, Fortune 500) reported weaker-than-expected quarterly profit and warned that the impact of the recently stronger dollar will hurt fourth-quarter and full-year growth rates. Shares fell 15.4%.

In other company news, American Express (AXP, Fortune 500) announced that it will cut 7,000 jobs, or more than 10% of its staff, amid the ongoing credit crisis.

Dow component GM (GM, Fortune 500) slumped over 10% amid ongoing woes for the company and the auto sector. The governors of six states sent a letter to federal officials asking that they intervene to help the hard-hit domestic automakers. GM and Cerberus, the parent of Chrysler, are in talks about a merger, but need financing.

Also impacting the stock was GMAC, the troubled auto finance and mortgage lending company that’s 49% owned by GM. GMAC said it’s in talks with federal regulators to become a bank holding company, so that it can access government funds. Complicating matters further, Cerberus owns the other 51% of GMAC.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by four to one on volume of 1.38 billion shares. On the Nasdaq, winners beat losers five to two on volume of 2.55 billion shares.

Other markets: The dollar fell against the euro and gained versus the yen.

U.S. light crude oil for December delivery fell $1.54 to settle at $65.96 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery fell $15.50 to settle at $738.50 an ounce.

Gasoline prices fell another 4 cents overnight, to a national average of $2.547 a gallon, according to a survey of credit-card activity by motorist group AAA. It was the 43rd consecutive day that prices have decreased. During that time, prices have fallen by $1.31 a gallon, or nearly 34%.

A good week, a brutal month: Stocks have bounced back this week, finding some momentum at the end of a wretched October. For the week, the S&P 500 is up 8.8% as of Thursday’s close.

But at the same time, investors pulled more money out of equity mutual funds than they did in the previous week, according to tracking firm Trim Tabs. The amount of money withdrawn from stock mutual funds in the week ended Oct. 29 rose to 9.2 billion from 6.5 billion the previous week.

Despite the recovery, October will go down in the history books as one of Wall Street’s worst months of all time.

As of Thursday’s close, the Dow had lost 1,670 points, the Dow’s worst month ever, according to Stock Trader’s Almanac info going back to 1901. On a percentage basis, the decline of 15.4% doesn’t rank in the top ten.

The S&P 500 lost nearly 212 points, or 18.2% in the month, and is currently on track to post its worst month ever on a point basis and ninth worst ever on a percentage basis, going back to 1930.

The Nasdaq dropped 384 points, or 18.4% in October, tracking its seventh-worst month ever on a point basis and its sixth-worst month on a percentage basis, going back to its inception in 1971.

October also brought lows that could constitute a market bottom, analysts say. However, bottoming out is a process. In the last bear market, stocks made lows in the summer of 2002, "retested the lows" in October 2002, and then retested them once more in March 2003 before finally making a sustained gain over the next few years.

The major gauges seem have hit a low on Oct. 10, when the Dow dipped below 7,900 and the S&P 500 fell below 840. The Nasdaq initially made a low on that same date, before retesting it a few weeks later and falling below 1,500. Stocks may need to fall back to those lows again before moving higher this time.

Although with the depth of the recession and the ongoing credit crisis, the stock market now is not likely to see an advance comparable to the more than 4-year bull market that followed the last bear market.

"Stocks are building a good base right now," said Will Hepburn, president and chief investment officer at Hepburn Capital Management.

He said that stocks will likely keep moving sideways in the short term, but could be setting up for a multi-month rally six months out as the economy begins to stabilize and banks start lending again.  

Source