Financial News for the Week Ending December 15th
After rising above pre-election levels during the week, U.S. markets ended the week down concluding a three week winning streak. Fiscal cliff negotiations continued to weigh on stock markets as little progress has been made and the deadline is quickly approaching. The S&P 500 fell 0.3% and the Dow dropped 0.2% for the week. In Europe stocks were flat ending up 0.1% and Japan jumped 2.2% on positive news out of China and weakening Yen. On the fixed income side the 10 year Treasury yield rose to 1.709%.
Due to revisions to growth in the second quarter, Japan is now in a recession.
EU finance ministers reached an agreement that would bring most of the continents’ banks under a single supervisor. The ECB would then be able to police the most vulnerable banks and force them to raise their capital requirements or shut them down. The moves were geared to help prevent future crises and help resolve Europe’s ongoing problems.
The Fed concluded its most recent policy meeting by announcing that it was replacing its Operation Twist program with additional bond purchases. They will purchase $85 billion a month of Treasury and mortgage backed securities. Bernanke said the Fed would also continue to keep interest rates near zero until unemployment fell to 6.5% or inflation rises to 2.5%. This is a new step for the Fed placing specific hurdles that will signal to markets their future policy moves. They expect to keep short term rates at the near zero level until 2015 based on current Fed projections.
Delta agreed to buy 49% of Virgin Atlantic for $360 million.
Berkshire Hathaway bought back $1.2 billion worth of shares in an unusual move for the company.
Reposted from the Raffa Wealth Management Blog.
All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.