April 8th, 2009
02:49 PM ET

Financial Dispatch: Building a rally on Wall Street

Andrew Torgan
CNN Financial News Producer

A big merger in the home-building sector is giving Wall Street a lift today, overshadowing dismal numbers from aluminum maker Alcoa as earnings season gets underway.

Pulte Homes is acquiring Centex Corp. in a stock transaction worth $3.1 billion. And that’s ignited a rally across the entire building sector. Executives say the deal will put the combined company in a better position to navigate the weak housing environment.

New home sales sank to the lowest level on record in January, but rebounded slightly in February.

Insurance stocks are also making gains today, following reports that the Treasury Department is poised to open its $700 billion bailout program to life-insurance companies, helping an industry that is considered a lynchpin of America’s financial system.

Investors have been increasingly worried about the health of life insurers, which have been hit hard by worries about capital requirements and mounting losses.

The life-insurance industry is an important component of the financial system. Millions of people have placed their families' financial well-being in the hands of such companies, so keeping them afloat is considered crucial to maintaining confidence.

And speaking of bailouts, the Treasury Department says struggling automakers Chrysler and GM have launched supplier support programs backed by up to $5 billion in government funds.

The programs will guarantee receivables owed to the auto parts suppliers for any goods shipped after March 19.

GM will get $2 billion under the Treasury programs and Chrysler will receive a $1.5 billion line of credit.

Consumer credit fell in February, led by a sharp decline in credit card usage, as the ailing economy and widespread unemployment curbed spending.

Total consumer borrowing fell a seasonally-adjusted $7.4 billion, or 3.5%, to $2.564 trillion in February, according to the Federal Reserve.

Securities regulators voted unanimously today to issue proposed curbs on short selling - a type of investing blamed by some lawmakers and executives for exacerbating the financial crisis and driving down stock prices - for a 60-day public comment period..

That includes the return of the so-called "uptick rule," which allowed short sales - a bet that a stock's price will fall - only when the last sale price was higher than the previous price.

The rule, first adopted after the 1929 stock market crash, is viewed by some as a way to relieve downward pressure on a stock that is dropping sharply.

The SEC previously concluded that advances in the marketplace had rendered the rule ineffective and abolished it in 2007.

Gas prices jumped by 7-tenths of a cent overnight to $2.047 a gallon.

29 states and the District of Columbia have regular unleaded gas prices of $2 and higher. The highest gas prices are in Alaska ($2.522).

21 states have regular unleaded gas prices below $2. The cheapest gas prices are in New Jersey ($1.873).

And finally, Ford is recruiting 100 young, Web-savvy volunteers to test drive its new Ford Fiesta over the next six months.

Volunteers get the keys handed to them for free, but in return they have to post their impressions on the small, fuel-efficient vehicle on social networking sites.

And the buzz is already building: Ford received some 4,000 applications for the program, and has launched a fan page on Facebook.com a Twitter account, and a YouTube channel.

Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Oil • Unemployment
soundoff (2 Responses)
  1. Annie Kate

    One thing that is encouraging is that at least this financial downturn has made people think twice about whipping out the old credit card to pay for stuff. While it probably doesn't make many financial experts happy that credit card usage is down, it does show that people are at last looking to see whether or not they can afford the bill at the end of the month. While that means we are spending less, maybe we are spending more wisely.

    April 8, 2009 at 3:58 pm |
  2. Michael "C" Lorton, Virginia

    These economic "ticklers," as I call them--are just that--sparks left behind after the "ecomomic flame" has burned out--and if we don't lite that economic fire soon--there are not going to be even "sparks" left.

    April 8, 2009 at 3:00 pm |