The stock losses of today cut yesterday's gains in half as Fed Chairman Bernanke offered no new stimulus policies in his afternoon speech.
The rate on the 30-year fixed mortgage hit 4.12 pct., 15-year falls to 3.33 pct. which are both record lows.
However getting a mortgage at these rates aren't as easy as it once was unless you have pristine credit.
Here are the top financial stories of the day:
1) Stocks End Lower After Bernanke's Talk-From The Wall Street Journal
Stocks declined Thursday, eroding some of the prior session's advance, as Federal Reserve Chairman Ben Bernanke's remarks failed to calm investor jitters over the state of the economy.
The Dow Jones Industrial Average dropped 119.05 points, or 1%, to 11295.81, following Wednesday's 276-point surge. The Standard & Poor's 500-stock index ended down 12.72 points, or 1.1%, to 1185.90. The Nasdaq Composite dropped 19.80 points, or 0.8%, to 2529.14.
After bouncing between small gains and losses for much of the session, stocks turned lower after Mr. Bernanke's speech in Minneapolis largely mirrored what was said at Jackson Hole, Wyo., at the end of last month. Many traders had been hoping for more insight into the central bank's plans to support the economy at the meeting of the Fed's decision-making body Sept. 20-21.
"The markets were hoping to hear something upbeat from Bernanke, especially in terms of what the Fed's intentions might be. It was wishful thinking, quite frankly," said David Joy, chief market strategist for Ameriprise Financial.
Financial and industrial stocks were weakest. Defensive utility and consumer-staple stocks were the S&P 500's strongest-performing sectors, finishing with small losses.
Technology shares helped limit the blue-chip Dow index's losses. Cisco Systems was the measure's strongest component, gaining 2.6% after the technology bellwether got an investment-rating upgrade to "buy" from "hold" by stock analysts at Auriga. The analysts said the company was "well positioned" to gain market share in business segments such as switching, routing and servers.
Two big financial stocks, J.P. Morgan Chase and Bank of America, led the Dow's led decliners, each falling 3.7%.
Another batch of weak employment data contributed to the session's cautious tone. The number of people filing initial jobless claims rose to a seasonally adjusted 414,000 for the week ended Sept. 3.
"I think [the market] would be significantly worse if there wasn't this false expectation that there's a quick [policy] fix out there. In my opinion, there is no quick fix," said Jeffrey Sica, president and chief investment officer of Sica Wealth Management.
In corporate news, shares of online restaurant-review and reservation company OpenTable slumped 8.3% after Google agreed to buy restaurant-review firm Zagat for an undisclosed price, highlighting Google's turn to local businesses like listings and maps for restaurants.
Caliper Life Sciences soared 41% after the diagnostics-technologies company agreed to be acquired by PerkinElmer for about $600 million in cash.
Men's Wearhouse lost 9.5% after the apparel retailer reported that fiscal second-quarter earnings rose above estimates but that gross margins declined.
G-III Apparel slumped 17%. The clothing company said Wednesday its fiscal second-quarter profit slid 48% as it discounted merchandise to help stimulate demand. The company also posted higher expenses and cut its full-year earnings outlook.
Valero Energy gained 4.1%. Oppenheimer stock analysts sharply raised their third-quarter and 2011 earnings targets, predicting higher refining margins for the company.
Smith & Wesson Holding lost 7.8%. The gun maker's fiscal first-quarter profit slumped 87% amid weaker gross margins and lower security solutions sales, although firearm sales increased sharply. The company also cut its full-year sales view.
In separate data, the U.S. trade deficit in July posted its biggest drop in nearly 2½ years, as exports surged to a record. The sharp narrowing in the July trade gap—its biggest contraction since February 2009—came as oil prices have pulled back from nearly three-year highs reached in May.
2) 30-year mortgage falls to 4.12 pct., record low-From the AP
Fixed mortgage rates fell this week to the lowest levels in six decades. But few Americans can take advantage of the rates to refinance or buy a home.
The average rate for the 30-year fixed mortgage fell to 4.12 percent, down from 4.22 percent, Freddie Mac said Thursday. It's the lowest level on records dating back to 1971. Freddie Mac said the last time rates were cheaper was 1951, when most long-term home loans lasted just 20 or 25 years.
The average rate on a 15-year fixed mortgage, a popular refinancing option, fell to 3.33 percent from 3.39 percent. That's the lowest on records dating to 1991 and likely the lowest ever, according to economists.
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell to an all-time low this week. An uncertain outlook for the U.S. economy has led many investors to shift money out of stocks and into the safety of Treasurys, lowering the yield.
Record-low mortgage rates have done little to energize the depressed housing market.
Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. That compares with five years ago, when the average 30-year fixed rate was near 6.5 percent.
Yet sales of new homes are on pace to finish the year as the lowest on records dating back a half-century. The pace of re-sales is shaping up to be the worst in 14 years.
Many Americans are in no position to buy. High unemployment, scant wage gains and large debt loads have kept them away.
Others can't qualify for the lowest rates. Banks are insisting on higher credit scores and 20 percent down payments for first-time buyers. Many repeat buyers have too little equity invested in their homes to meet loan requirements.
"Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small," said Greg McBride, Bankrate.com's senior financial analyst."
Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data.
A bigger issue is just half of Americans say they'll ever be able to save enough money for any type of down payment, let alone one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling.
Nearly a third of homeowners have nearly zero equity or are underwater in their mortgage, according to the real estate research firm CoreLogic. That leaves then unable to refinance because of lender-imposed limits and the cost of extra fees.
Increased refinancing activity isn't providing much economic benefit. Without much equity, few are drawing money out for home-improvement projects or other big expenditures.
Many people must also pay extra fees to get the low mortgage rates. Those fees are known as points. One point is equal to 1 percent of the total loan amount.
The average fees for the 30-year held steady at 0.7 point. The 15-year fixed loans and 5-year and one-year adjustable rate loans were all at 0.6 point.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rate on a five-year adjustable-rate mortgage was unchanged at 2.96 percent. That's the lowest rate on records dating to January 2005. It was the sixth straight week of record lows for this type of loan.
The average rate for the one-year adjustable-rate mortgage fell to 2.84 percent. That's the lowest on records going back to 1984.
3) Where's My Super-Cheap Mortgage? From SmartMoney
With mortgage rates at a 50-year low and banks near his Brookline, NH, home touting offers of 4% or less,
Tom Rogers thought it would be a perfect time to refinance. But in spite of a solid credit score, after an exhaustive survey of lenders in the area and online, Mr. Rogers couldn't find a single one willing to give him such a rock-bottom rate. He eventually settled for a mortgage almost a full percentage point higher than what he had hoped for.
"I was annoyed," he says. "We're someone they should want to do business with."
It is an increasingly common frustration. The gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years, save a single week last September. As of last week, the lowest available rate — according to a survey of more than 200 lenders by LendingTree.com — was 3.75% for a 30-year fixed mortgage, but the average rate was 4.39%. At the current 0.64 percentage-point spread, the difference in rates could mean an extra $53,000 in interest payments over the life of a 30-year, $400,000 mortgage.
While there is always a spread — not all borrowers qualify for the lowest rate, after all — it is usually much smaller: An average spread is usually around 0.40 percentage point.
The bigger discrepancy of late has little to do with borrowers' credit scores, which historically have largely decided what rates lenders choose to offer. Instead, it is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informa Research Services, by offering borrowers slightly higher rates.
Lenders say they haven't lowered rates further because, simply, they don't have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost.
And there is still plenty of demand given that rates are still historically very low. As it is, lenders are able to make loans that, while still cheap, are more profitable, says Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, a trade organization that represents mortgage lenders.
The lowest advertised rates are available for only those borrowers with pristine credit. Anyone else could consider waiting, as the rates they get may be lower as soon as the current surge in demand ebbs, possibly as soon as the end of September. For those looking to refinance or buy a home now, mortgage analysts suggest taking the lowest rate offered and shopping it around to other lenders. In particular, regional, rather than national, outfits, may be more willing to negotiate.
Quote of the Day from Dave Ramsey.com:
Luke 8:15 — But the seed on good soil stands for those with a noble and good heart, who hear the word, retain it, and by persevering produce a crop.
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