The banking sector is in focus today after B of A CEO Kenneth Lewis said the economy will get worse before it gets better and Citigroup's shares fell below $8 a share.
What to Watch For In The US Session
? Banks In Focus
? CPI On Tap
? Fed Minutes May Sink Sentiment
Banking Sector Concerns Expected to Weigh Stocks, Can Easing Inflation Change Sentiment
The banking sector is in focus today after B of A CEO Kenneth Lewis said the economy will get worse before it gets better and Citigroup's shares fell below $8 a share. The troubles of the Detroit automakers have been a weighing factor for equities as the uncertainty surrounding them has keep traders on the sidelines. In testimony yesterday the executives of the carmakers told politicians that the industry was teetering on the brink of disaster. The fallout from a collapse from one of them would reverberate throughout the economy which is already in a fragile state. The U.S. consumer price report is scheduled for release today and inflation is expected to have fallen 0.8% in October bringing the annualized rate to 4.0% from 4.9%. The minutes from the FOMC's last policy meting will be released today and may give a glimpse into how concerned the central bank is with downside growth risks and whether they will cut rates further.
Dow Jones 8424.75
The Dow Jones Industrial Average may look to reverse yesterday's gains due to growing concerns over the banking sector. However, the prospect of another rate cut from the Fed may be enough to push the blue chip index into positive territory.
U.S. Carmakers Troubles Weigh on European Stocks
The troubles of the U.S.?s big three automakers have sparked risk aversion and have weighed on European stocks. If Ford, GM, and Chrysler fail to get the necessary funding then we may see one of them fail which could sink the already fragile U.S. economy. As we have seen with the credit crisis trouble sin the U.S. will ultimately impact the European economies. Meanwhile, the minutes from the BoE's last policy meeting revealed that not only was there a unanimous vote to lower rate s by 150 bps but 200 bps was a strong consideration. Therefore, it is almost assured the central bank will ease rate again in the near-term as they guard against inflation. The Euro-zone economy continued to show signs of deteriorating as construction fell by 1.3% in September which was before credit market seized, which could signal that amore weakness may be forthcoming.