Phil's Financial Tip of the Day:
Dave Ramsey began his program today by talking of common sense Christmas budgeting that my wife and I happen to use which makes our Christmas season so much less stressful. As Mr. Ramsey said, make a total dollar amount budget of all the people you will be shopping for this season (Ex. $750 for all presents to be bought this Christmas season). Now break that total amount down per person. This is what each individual will be getting in monetary value per present(s) this year. So if you overspend on Aunt Josie by $20, then someone else(could it be Uncle Tom?) will be getting $20 less on their gift.
In the Markets today:
U.S. stocks closed sharply lower Monday, with the Dow ending the session negative for the year, as the failure or the Supercommittee and heavy debt loads both in the United States and Europe heightened fear and volatility.
Selloff in fourth day on Europe, U.S. debt concerns-From Reuters
U.S. stocks fell for a fourth session on Monday, as the lack of progress in dealing with heavy debt both in the United States and Europe further sapped investor confidence in equities.
Risky assets like commodities also fell, sparking a selloff in shares of industrials and energy companies. Volume was lower than average, with investors more inclined to sit on the sidelines amid the uncertainty.
"We're seeing signs of worsening in Europe, worsening in our market here. There is no viable resolution to this," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.
The Dow Jones industrial average (DJI:^DJI) was down 248.85 points, or 2.11 percent, at 11,547.31. The Standard & Poor's 500 Index (SNP:^GSPC) was down 22.66 points, or 1.86 percent, at 1,192.99. The Nasdaq Composite Index (Nasdaq:^IXIC) was down 49.36 points, or 1.92 percent, at 2,523.14.
A special U.S. congressional committee was expected to concede failure to reach a deal after three months of talks to slash the deficit.
There are concerns the stalemate will make it more difficult to pass extensions of stimulative measures like payroll tax cuts, which could hurt the U.S. economy. In addition, investors are worried that the committee's inability to come to an agreement could result in another downgrade of the U.S. credit rating, though so far the major ratings agencies have not commented.
Moody's Investors Service said a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for France's credit rating.
Blue chips, which have been outperforming smaller cap stocks, fell the most. The Dow was off 0.3 percent for the year. The S&P and the Nasdaq have fallen about 5 percent.
The S&P quickly fell through the 1,200 level seen as the next level of support. After that support was seen at 1,187, representing the 61.8 percent retracement of the 2011 high to low slide.
Rick Bensignor, chief market strategist at Merlin Securities in New York, said the negative headlines from across the globe made it less likely the market would see a sustained rally despite stocks having what many traders say are attractive valuations.
"Cheap valuations only do so much. They don't make bull markets, they make bidders to curtail down markets but in and of themselves, the fact that stocks are cheap is not a good enough reason to think that they are going to go higher."
Among blue-chip stocks, Bank of America (NYSE:BAC) fell 5 percent to $5.49. On the Nasdaq, Amazon.com Inc (NasdaqGS:AMZN) shares lost 4 percent to $189.25.
After the closing bell, Hewlett-Packard's (NYSE:HPQ) reported quarterly results that beat Wall Street's expectations. The stock rose 2.4 percent to $27.50 in extended trade.
In Europe, the FTSEurofirst 300 (.FTEU3) index fell to its lowest close in nearly seven weeks. Along with the new concerns about France, Spain's bond yields rose despite a clear-cut victory for austerity-committed conservatives in Sunday's election. There were few details on Prime Minister-elect Mariano Rajoy's plans.
About 7.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the current daily average of 8 billion shares.
On the New York Stock Exchange, about six stocks fell for every one that rose. On the Nasdaq, decliners beat advancers by 5 to 1.
Merger activity provided a bright spot as Pharmasset Inc (NasdaqGS:VRUS) surged 84.6 percent to $134.14 after Gilead Sciences Inc (NasdaqGS:GILD) agreed to buy the company for $11 billion in cash. Gilead slumped 9.1 percent to $36.26.
Economic data showed U.S. existing-home sales unexpectedly rose in October as low interest rates for mortgages and rising rents encouraged more home buyers, a trade group said, but equities were little helped by the data.
Top financial story of the day:
A third of Realtors say they had at least 1 contract for a home fall apart at the last minute as first time buyers continue to decline.
October home sales rose 1.4 percent but still weak-From AP
The number of Americans who bought previously occupied homes rose slightly last month but remained at depressed levels. And more deals are being canceled at the last minute, a sign that even those who are looking to buy are worried about the housing market.
Home sales rose 1.4 percent last month to a seasonally adjusted annual rate of 4.97 million, the
The sales are measured when buyers close on the homes.
Contracts have been cancelled for a number of reasons: Banks have declined mortgage applications; home inspectors have found problems; appraisals showed a home was worth less than the bid; a buyer lost a job before the closing.
Still, the October increase in home sales beat analysts' expectations. Some economists took that as a positive sign for the troubled market.
"We are not looking for a housing renaissance but the straws in the wind suggest that activity in the sector might be improving slightly," said John Ryding, chief economist at RDQ Economics.
More than two years after the recession officially ended, many people can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling. Home sales are also being hurt by a steep decline in first-time buyers, who are critical to reviving the housing market.
Activity among first-time buyers rose slightly last month to make up 34 percent of sales. That's up from 32 percent in September.
At the same time, homes at risk of foreclosure made up 28 percent of sales last month. That's down from 30 percent in September. Many of the sales went to investors, who are increasingly buying homes priced under $100,000. Sales in that category have increased more than 24 percent over the past year while sales of more expensive homes have fallen.
Sales have fallen in four of the five years since the housing boom went bust in 2006. Declining prices and record-low mortgage rates haven't been enough to boost sales.
Most economists say home prices will keep falling, by at least 5 percent, through the rest of the year.
Many forecasts don't anticipate a rebound in prices until at least 2013.
The median sales price dropped roughly 2 percent to $162,500 in October.
The high rate of foreclosures has made re-sold homes much cheaper than new homes. The median price of a new home is roughly 30 percent higher than the price of one that's been occupied before — twice the normal markup.
Investors are taking advantage of the discounts. Their purchases made up 19 percent of all sales last month, compared with less than 10 percent in healthier housing markets.
Home sales rose across the most of the country. Sales increased 4.4 percent in the West, 2.8 percent in the Midwest and 2.1 percent in the South. They fell 5.1 percent in the Northeast.
The glut of unsold homes declined slightly in August to 3.33 million homes. At last month's sales pace, it would take 8 months to clear those homes. Analysts say a healthy supply can be cleared in six months.
The housing market continues to struggle even as the broader economy has shown some improvement in recent months.
The economy grew at an annual pace of 2.5 percent in the July-September quarter. Many economists expect slightly better growth in the October-December quarter.
Last week, the government reported further improvement in the number of people seeking unemployment benefits for the first time. The number fell to 388,000, the fewest since April.
In October, the economy added a net total of 80,000 jobs. It was the 13th straight month of gains. Still, the additional jobs were fewer than the roughly 125,000 that are needed each month just to keep up with population growth.
Quote of the Day from Dave Ramsey.com:
If you can't sleep, then get up and do something instead of lying there and worrying. It's the worry that gets you, not the loss of sleep. — Dale Carnegie
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