Early Gains in New York Evaporate

Nichole Harper
02 Oct, 2012
New York City

Wall Street edged lower after opening sharply higher as Fed Chairman Bernanke offered cautious views on the economy. Investors look ahead at the meeting of central banks this week. Chrysler led September sales with a rise of 12%.

[R]11:45 AM New York – Wall Street edged lower after opening sharply higher as Fed Chairman Bernanke offered cautious views on the economy. Investors look ahead at the meeting of central banks this week. Chrysler led September sales with a rise of 12%.[/R]

Stocks on Wall Street opened sharply higher and extended gains for the second day on the hopes that Spain is nearing a bailout request.

However, market indexes began to lose momentum after the release of domestic auto sales for September and banks were under pressure after the latest lawsuit from the New York State Attorney General’s office.

The S&P 500 index opened up 0.6% and after one hour of trading lost of most its gain and the Nasdaq Composite index opened up more than 0.5% and traded down to a gain of 0.3%.

Stocks were powered up after the release of better than expected ISM manufacturing index report but lost steadily after Fed Chairman Ben Bernanke expressed his caution about the slow improvement in the labor market and weak economic recovery.

Global investors were also looking ahead at the decisions from several central banks later in the week.

Reserve Bank of Australia unexpectedly lowered its benchmark interest rate by 25 basis points to 3.25%. The move also knocked off the Australian dollar by 0.6% to $1.02.

European Central Bank, Bank of England and Bank of Japan are scheduled to meet later the week and are expected to hold interest rates but offer more clarity on asset purchase and bond buying programs.

Automakers were in focus after the release of September sales data and lifting hopes that the industry is on track to deliver 14.5 million unit sales in the month, up 12% from a year ago sales of 13.1 million.

General Motors ((GM)) edged up 0.5% after it reported sales increased 1.5% and Ford Motor Company ((F)) said sales declined 0.1%. Chrysler Group said sales for the month increased 12% from a year ago.

JP Morgan Chase ((JPM)) edged down a day after New York attorney general filed a civil lawsuit that Bear Stearns perpetrated massive fraud in sub-prime mortgage securities that caused investors to lose as much as 25% or $23 billion.

The suit focuses on Bear Stearns before the purchase by JP Morgan in 2008 and is the first lawsuit to be filed by the RMBS Working Group set up by President Obama to investigate and prosecute alleged misconduct that contributed to financial crisis.

The financial crisis of 2008-2009 pushed millions of homeowners in foreclosure and knocked the U.S. economy into a recession that led to a worldwide meltdown. So far not one financial service industry executive has faced regulatory actions or has been forced out.

John Wiley & Sons Inc ((JWA)) said it agreed to purchase online-education firm Deltak.edu LLC for $220 million.

The closely held education service provider works with several universities and colleges and helps them develop and support online degree certificate program and currently operates 100 online programs.

In the last fiscal year ending in September, Deltak.edu had revenues of $54 million.