Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Thu, Jul 30 1992 Date: Thu, 30 Jul 92 04:32:02 EDT Message-ID: 07-30 0000 DECISIONLINE: Banking & Economy USA TODAY Update July 30, 1992 Source: USA TODAY:Gannett National Information Network STOCKS SOAR FOR SECOND DAY: The stock market rallied for the second consecutive day Wednesday, as investors bought shares on the prospect of lower interest rates and strong corporate profits. The Standard & Poor's 500 index hit a record, rising 4.71 points to 422.23, passing its Jan. 15 record of 420.77. The Dow Jones industrial average shot up 45 points to 3379. The Dow has added 97 points the past two days. (For more, see special Market package below.) BANK FAILURES MAY RISE: New banking rules to kick in December 19 could increase the number of bank failures, Federal Deposit Insurance Corp. Chairman William Taylor said Wednesday. Taylor told Reuters that 70 to 80 banks don't meet new minimum capital standards. If those banks don't increase their cushion against loan losses or have a good plan to, they must be closed. This year, 68 banks have failed. FORD POSTS SOLID EARNINGS: Ford recorded its best quarterly results in two years in the second quarter, earning $502 million. A year ago, it lost $324 million. Ford's U.S. and European automotive operations accounted for $213 million of net income. Ford remains cautious because of the stagnant economy. "It will ... be difficult to achieve healthy results in today's environment," says Chairman Harold Poling. HOMEFED BAILOUT TO BE COSTLY: The failure of San Diego-based HomeFed Bank likely will cost taxpayers more than $2 billion, says Timothy Ryan, head of the Office of Thrift Supervision. Ryan's statement, reported in the Los Angeles Times Wednesday, suggests HomeFed's bailout cost could top the most expensive failure to date: The $2.6 billion collapse of Lincoln Savings. HomeFed was seized July 6. SEC ADDS RULES FOR SMALL BIZ: Small businesses will find it cheaper and easier to raise money in the stock and bond markets under rules adopted Wednesday by the Securities and Exchange Commission. The rules let small firms use simpler forms to register offerings and disclose information to investors. The rules will apply to firms with up to $25 million in annual revenue and $25 million in outstanding public stock. SALARIES TO BEAT INFLATION: Salary increases will beat inflation for the second year in a row, according to a survey of 587 companies by the Conference Board. Pay increases will average 5% this year and next year, compared with a forecast of a 3.3% rise in the consumer price index this year and 4.1% next year. RATES FALL AT TREASURY AUCTION: Yields on five-year Treasury notes fell at Wednesday's auction to the lowest level since the start of regular five-year-note auctions in 1977. The average yield was 5.56%, vs. 6.43% at the last auction June 24. Yields on two-year notes fell to the lowest level since regular auctions of those notes began in 1974. The average yield was 4.29%, vs. 5.11% at the last auction June 23. GOLD, SILVER FALL: Precious metals prices fell Wednesday. Gold closed on the Commodity Exchange at $356.50, off $2.40; Republic National Bank quoted a late bid of $356.40, down $2.85. Gold also fell in London and Zurich. On the Comex, silver fell to $3.891 from $3.943. Silver fell in London to $3.93 from $3.95. PRICES LITTLE CHANGED: Energy futures prices settled mixed in uneventful dealings Wednesday. The price of benchmark light sweet crude oil for delivery in September slipped 5 cents a barrel to settle at $22 on the New York Mercantile Exchange. Regular unleaded gasoline for August delivery settled at 62.15 cents a gallon, up .40 cent. August home-heating oil fell .86 cent to 60.89 cents a gallon. SPECIAL PACKAGE ON MARKET: LOW RATES TO KEEP RALLY GOING: Analysts say stocks might keep rising because investors seem convinced that long-term interest rates will continue to decline and because second-quarter corporate earnings are matching or exceeding expectations. "The market loves low interest rates and earnings that grow," David Blitzer, chief economist at S&P. Wednesday, Dupont and Norfolk Southern were among companies reporting better-than-expected earnings. BOND MARKET HAS SELLOFF: The rally started Tuesday, when poor consumer confidence numbers ignited the 30-year Treasury bond market. Bond investors bought in hopes that a seemingly weak economy and a low inflation rate would allow long-term interest rates to decline even more. But bond investors sold off 30-year Treasury bonds Wednesday. The result: Treasury bonds fell, pushing yields up to 7.45% from 7.43% Tuesday. MORE BOND BUYING SEEN: The bond market's pause doesn't worry some analysts. Stefan Abrams, strategist at Kidder Peabody, blames the afternoon bond selloff on a temporary urge among investors to take profits. He expects investors to start buying bonds again soon, pushing yields lower, expecially given that inflation is so low. Because of that, "This remains a bull market" for stocks, he says. EARNINGS TO KEEP STOCKS RISING: Hugh Johnson, analyst at brokerage First Albany, says stocks can go higher - though he expects the Dow to hover near 3400 for a month before it starts to rise again. Cost-cutting by many companies the past two years means earnings should continue to rise even if economic growth remains slow. Says Johnson: "We're seeing the kind of earnings growth that's strong enough to boost stocks." (End of package.) DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Thursday at 3379.19 after closing up 45.12 points Wednesday. The New York Stock Exchange composite opens at 231.95, up 2.41. The American Stock Exchange market value opens at 385.94, up 1.39. The NASDAQ OTC composite opens at 577.49, up 5.86. DOLLAR OPENS UP OVERSEAS: The dollar opens up on Thursday. It opens at 0.5208 British pounds, up from 0.5188; 5.0045 French francs, up from 4.9735; 1.4815 German marks, up from 1.4740; and 127.77 Japanese yen, up from 127.40. (As of 3 p.m. Wednesday. Source: First American Bank of New York.) 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. 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