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[BRIEFING.COM] Tuesday marked another ugly session for stock investors as a weak outlook from Bank of America (BAC 23.77, -8.45) and cautious comments from Fed Chairman Ben Bernanke overshadowed a Federal Reserve plan to improve liquidity in short-term corporate borrowing.

Stocks rose 1.5% at the open on the Fed's plan to shore up short-term corporate borrowing, but overall economic concerns quickly sank stocks.  In the end, the S&P 500 plunged 5.7%, settling at its worst levels, to a new five-year low in broad-based weakness.  All ten economic sectors posted a loss, with notable declines in financials (-11.5%), tech (-6.1%) and consumer discretionary (-5.7%).

Fed Chairman Bernanke gave the market little to cheer about in a speech at the National Association for Business Economics annual meeting. He said that economic activity is likely to be subdued through this year and into 2009 and increases in financial market turmoil may extend the period of weak economic performance.

He did leave the door open for a FOMC rate cut on Oct. 29, although fed funds futures had already priced in a cut of at least 50 basis points.

Bank of America, the second largest U.S. financial firm by market cap after JPMorgan Chase (JPM 39.86, -4.14), fell 26% after preannouncing disappointing third quarter earnings and giving a dour outlook regarding the state of the economy. In an attempt to shore up capital in the face of current economic conditions, BofA is cutting its quarterly dividend by 50% to $0.32 and plans to raise $10 billion in a common stock offering.

CNBC reported the common stock offering was likely to be priced at less than $25 per share. The notion that BofA would have to sell stock at a more than 22% discount added to overall investor unease, especially in the financial sector.

The commercial paper market, which many U.S. companies rely on for short-term borrowing, has been under pressure as investors flocked to the safety of Treasuries and away from money market funds. As a result, many companies found it difficult to issue commercial paper, or had to pay a high cost.

In an attempt to bring down the cost of commercial paper costs and improve liquidity, the Fed announced this morning that it created a Commercial Paper Funding Facility, which will provide a liquidity backstop for the strained commercial paper market. The Fed will purchase three-month unsecured and asset-backed commercial paper from eligible issuers. The Fed said it has no limit to how much commercial paper it can buy.

Separately, commodities (+1.0%) staged a modest recovery effort from Monday's 5.0% drop, aided by a 0.8% decline in the dollar. Crude prices rose 2.3% to $89.80 per barrel.

The S&P 500's loss marked its fifth consecutive decline -- its longest losing streak since January. The index has fallen 14.5% over the past five sessions and is down 32.2% this year.

2008-10-07 15:30 ET Dow -346.71 Dow Close 9611.95 Nasdaq -77.68 Nasdaq Close 1788.04 S&P -42.18 S&P Close 1015.47 NYAdv 479 NYDec 2707 NQAdv 551 NQDec 2225 

[BRIEFING.COM] Heading into the final half hour of trade, the S&P 500 is on pace for its fifth consecutive decline, its longest losing streak since January.  It is down 13% over the past five sessions.

The major indices fall to session lows, with the S&P 500 coming within one point of its multi-year low that was reached yesterday.

Reported at 3:00 PM ET, consumer credit fell $7.9 billion in August on a seasonally adjusted basis, compared to the expected gain of $5.0 billion.  This marked the first month-over-month decline since 1998.

After the close, Dow component Alcoa (AA 17.40, -0.71) kicks of third quarter earnings season.  Its earnings are expected to fall 4.7% year-over-year.

2008-10-07 15:00 ET Dow -304.22 Dow Close 9642.09 Nasdaq -69.39 Nasdaq Close 1792.14 S&P -35.45 S&P Close 1020.04 NYAdv 590 NYDec 2575 NQAdv 617 NQDec 2141 

[BRIEFING.COM] The recovery effort is short-lived as the major indices fall toward session lows.  All ten economic sectors are posting a loss.

Bank of America (BAC 25.41, -6.79) is two thirds done pricing its $10 billion common stock offering, compared to the expectations that it would be priced prior to the open, according to CNBC. The offering is now expected to be priced below $25 per share, a discount of at least 22%, CNBC reports.

2008-10-07 14:35 ET Dow -156.27 Dow Close 9796.05 Nasdaq -41.59 Nasdaq Close 1821.37 S&P -18.96 S&P Close 1037.93 NYAdv 651 NYDec 2508 NQAdv 667 NQDec 2076 [BRIEFING.COM] Stocks recover some losses, but still post a sharp decline.  The Dow was down as much as 362 points, compared to its current decline of 156 points.

Morgan Stanley (MS 17.91, -5.64) pares some losses on reports that the company said the investment it is receiving from Mitsubishi will close imminently, according to Reuters.

Although tech stocks (-2.7%) are under pressure this session, AMD (AMD 4.98, +0.75) is bucking the negative trend, up 18%.  The chip maker announced this morning that it was going to spin off its manufacturing operations in a partnership with Abu Dhabi, giving AMD a much needed cash infusion.

2008-10-07 14:05 ET Dow -328.15 Dow Close 9651.64 Nasdaq -74.45 Nasdaq Close 1791.93 S&P -39.37 S&P Close 1020.57 NYAdv 590 NYDec 2565 NQAdv 654 NQDec 2066 

[BRIEFING.COM] The major indices continue to tumble, and all three are now down more than 3%.  They are trading modestly above yesterday's intraday low.

At the Sept. 16 FOMC meeting, the fed funds rate was left unchanged at 2.00%, with the Fed citing significant concerns to both downside risks to growth and upside inflation risks.  The decision was unanimous.

The minutes for the Sept. 16 FOMC meeting were just released.  The minutes stated that some policy members leaned toward a rate cut, as the the Fed saw easing in inflation risk.  Some policy members felt intensifying financial strains that led to the economic outlook worsening will prompt for a rate cut at the Oct. 29 meeting. 

Morgan Stanley (MS 15.16, -8.34) is getting hammered, down 35% on no specific news item.  The financial sector is down 8.2%, and hit a fresh 52-week low.

2008-10-07 13:30 ET Dow -228.91 Dow Close 9730.57 Nasdaq -51.99 Nasdaq Close 1810.97 S&P -27.28 S&P Close 1029.61 NYAdv 706 NYDec 2436 NQAdv 767 NQDec 1940 

[BRIEFING.COM] Stocks fall to session lows in choppy action as Fed Chairman Bernanke gives his speech on the economy.  He is currently participating in a question and answer session.

Bernanke said the Fed will need to consider whether the current policy stance remains appropriate, noting there are increased economic risks while the inflation outlook has improved.  This indicates that the Fed may be considering a rate cut.  The Fed has left the fed funds rate unchanged at 2.00% for the last three meetings, citing both downside risks to growth and increased inflation concerns. Fed funds futures suggest a 28% chance the Fed will cut rates by 75 basis points on Oct. 29.

According to Bernanke, the slowdown in economic activity has spread outside of the housing sector.  He said payrolls are contracting, purchasing powers of households have eroded and increased uncertainties have begun to weigh on business investment spending.

The minutes from the Sept. 16 FOMC meeting are set for release in a half hour.

2008-10-07 13:00 ET Dow -177.30 Dow Close 9785.93 Nasdaq -42.29 Nasdaq Close 1820.67 S&P -22.38 S&P Close 1035.41 NYAdv 816 NYDec 2314 NQAdv 837 NQDec 1836 

[BRIEFING.COM] The stock market extends its decline, now down more than 2%.  All ten sectors are posting a loss as buyers sit on the sidelines.

Market breadth is bearish.  Declining issues outpace advancers by nearly 3-to-1 on the NYSE and by 11-to-5 on the Nasdaq.  Volume is less than the previous session's level at this time, but is more than the average over the previous 10 sessions.

Fed Chairman Bernanke is set to speak in about 15 minutes on the economic outlook and financial markets.

2008-10-07 12:30 ET Dow -126.24 Dow Close 9825.99 Nasdaq -29.94 Nasdaq Close 1831.97 S&P -14.84 S&P Close 1041.80 NYAdv 1031 NYDec 2085 NQAdv 970 NQDec 1694 

[BRIEFING.COM] The major indices fall session lows in broad-based selling interest.  Weakness in financials (-4.7%), consumer discretionary (-2.2%) and tech (-2.0%) is more than offseting the modest gains in in energy (+0.8%) and materials (+0.3%).

Commodities (+1.0%) have given up some gains, with oil prices now up only 1.5% at $89.20 per barrel.

All three of the major indices are down more than 1%.

2008-10-07 11:55 ET Dow -24.53 Dow Close 9932.80 Nasdaq -8.01 Nasdaq Close 1854.28 S&P -2.57 S&P Close 1054.36 NYAdv 1320 NYDec 1775 NQAdv 1213 NQDec 1423 

[BRIEFING.COM] The stock market has traded in volatile manner as traders digest a plan by the Fed to provide liquidity to short-term corporate borrowing and disappointing earnings from Bank of America (BAC 27.51, -4.70).

At midday, the S&P 500 is down 0.2% with seven of its sectors in positive territory.  The S&P 500 has traded as high as 1.5% and a low as -1.1%.

The commercial paper market, which banks and U.S. corporations rely on for short-term borrowing, has been under pressure as investors flocked to the safety of Treasuries and away from money market funds. As a result, many companies found it difficult issue commercial paper, or had to pay a high cost.

In an attempt to bring down the cost of commercial paper costs and improve liquidity, the Fed announced this morning that it created a Commercial Paper Funding Facility (CPFF), which will provide a liquidity backstop for the strained commercial paper market. The Fed will purchase three-month unsecured and asset-backed commercial paper from eligible issuers. The Fed said it has no limit to how much commercial paper it can buy.

Bank of America, the second largest U.S. financial firm by market cap after JPMorgan Chase (JPM 42.46, -1.54), is down 15% after last night preannouncing disappointing third quarter earnings of $0.15, which fell $0.51 short of expectations. In an attempt to shore up capital in the face of current economic conditions, BofA is cutting its quarterly dividend by 50% to $0.32 and plans to raise $10 billion in a common stock offering.

The financial sector is down 3.7%.

Commodities are up 1.4%, partially rebounding from a 5.0% loss in yesterday's trade. Oil prices are up 2.6% to $90.05 per barrel. Some of the buying interest in commodities is due to a 0.7% decline in the dollar.

Energy and material stocks are outperforming with gains of 2.1% and 1.8%, respectively.

2008-10-07 11:30 ET Dow -60.61 Dow Close 9900.22 Nasdaq -16.44 Nasdaq Close 1846.52 S&P -6.80 S&P Close 1050.83 NYAdv 1174 NYDec 1908 NQAdv 1071 NQDec 1521 

[BRIEFING.COM] Stocks retreat to session lows and then recover a bit, with the S&P 500 currently down 0.6%. The decline was broad-based, as five of the ten sectors now post a loss.

Financials (-4.0%) are posting the largest decline, with notable weakness in investment banks and brokerages (-6.3%)

Not all financial stocks are posting a loss. CME Group (CME 425.06, +21.39), operator of the Chicago Mercantile Exchange, is getting a large boost after it announced plans along with hedge fund Citadel to launch the first electronic trading platform with a central counterparty clearing facility for credit default swaps. CDS are a form of insurance against the default of debt.Dow dips more than 500 on worries about financials - AP - Tue 6:23 pm ET
The misery worsened on Wall Street Tuesday, with stocks piling on losses late in the session and bringing the two-day decline in the Dow Jones industrials to more than 875 points amid escalating worries about credit markets and the financial sector.

Fed, in emergency move, will lend to companies - AP - 50 minutes ago
Frantically trying to stop the bleeding on Wall Street, the Federal Reserve took a first-time step Tuesday to get cash directly to businesses and hinted that interest rates could come down soon.

Bernanke: Crisis could prolong economic pain - AP - Tue 2:00 pm ET
Federal Reserve Chairman Ben Bernanke warned Tuesday that the financial crisis has not only darkened the country's current economic performance but also could prolong the pain.

Alcoa's 3Q profit falls 52 percent - AP - 52 minutes ago
Alcoa Inc., the world's third-largest aluminum producer, on Tuesday reported a 52-percent drop in third quarter profit and said it would conserve cash by suspending its stock buyback program and all non-critical capital projects.

Retirement accounts have lost $2 trillion so far - AP - Tue 7:27 pm ET
Americans' retirement plans have lost as much as $2 trillion in the past 15 months -- about 20 percent of their value -- Congress' top budget analyst estimated Tuesday as lawmakers began investigating how turmoil in the financial industry is whittling away workers' nest eggs.

Fed minutes show policymakers saw balanced risks - AP - Tue 2:28 pm ET
Even in the midst of a severe meltdown on Wall Street, Federal Reserve officials at their September meeting believed the risks from weaker growth and higher inflation were roughly equal.

Credit barely eases after Fed plans to buy paper - AP - Tue 6:01 pm ET
The grip on the credit markets loosened just barely on Tuesday after the Federal Reserve said it would buy commercial paper, the unsecured short-term debt that companies sell for their short-term cash needs.

August borrowing drops at 3.7 percent rate - AP - Tue 3:11 pm ET
Consumer borrowing fell in August for the first time in more than a decade as households, battered by rising job layoffs and the decaying economy, cut back sharply on their use of credit.

AIG execs' retreat after bailout angers lawmakers - AP - 1 hour, 51 minutes ago
Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

Oil prices recover slightly after steep drop - AP - Tue 5:29 pm ET
Oil prices swung higher Tuesday, snapping a four-day plunge as investors temporarily halted their frantic selling to see whether the government's sweeping economic bailout can stem a widening global downturn