Many soothing words were spoken today for investors worried that subprime mortgage issues could spread further (this was seen as a factor contributing to yesterday’s decline): Federal Reserve Governor Warsh and Treasury undersecretary Steel both made calming statements today, claiming that there were no “systemic risks” associated with the recent subprime sector troubles. Chiming in, Philadelphia Fed President Plosser also underscored that (most) banks were in 'good shape' to handle any subprime losses. Topping it off was the market regulation chief of the SEC, who said that Bear Stearns' distressed hedge funds should be in a position to 'unwind in an orderly fashion.'

Such concerted action to spread good news may have been overkill. One financial news source called it “downplaying by government officials”. Still, at least for today, the market reacted positively, and the influential financial sector was able to recover some of yesterday’s losses. The market also rallied in spite of a rise in bond yields (i.e., a pullback in Treasuries).

More takeover activity, a touch of earnings optimism ahead of next week’s flood of earnings announcements, and a slight drop in crude oil prices (catalyzed by a US government report showing rising gasoline stockpiles) were also seen as providing a boost for the equities market today.

After the bell, cell phone maker Motorola issued a profit warning and a sales shortfall.

Key economic data for the week starting July 9, 2007. Numbers shown are consensus estimates (market anticipates this value) and prior value.

Thursday:
	8:30 Goods & Services Balance May: -$60.0B / -$58.5B

Friday:
	8:30 Retail Sales June: 0.2% / 1.4% (excl. Autos): 0.2% / 1.3% 10:00 Business Inventories May: - 0.3% / 0.4%

© HGH Associated Press

News Archive (from 7/1/2007 until 9/30/2007)