Fed Cuts Rates To Near Zero To Battle Slump

The Federal Reserve cut its target interest rate Tuesday to historic lows between zero and a quarter percentage point and said it could expand a program of unorthodox lending and securities purchases.

Wells Fargo, Wachovia and U.S. Bancorp immediately lowered their prime lending rates from 4 percent to 3.25 percent, and other banks will probably follow suit. Economists cautioned, though, that people frightened by the economy and worried about their own jobs may not feel like taking on more debt.

After two days of discussion among Fed officials, the central bank said it would use every weapon from its arsenal to lift the U.S. from recession. It began by reducing its target interest rate -- an overnight bank-lending rate called the federal-funds rate -- from 1%. Another Fed lending rate, the discount rate, will go to half a percentage point, a level last seen in the 1940s.

The cut was more than many economists expected, and the statement that came with it marked the latest signal by the Fed and its chairman, Ben Bernanke, that the central bank was prepared to take aggressive steps to revive the economy.

"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the Fed said in a statement. It added that it expected interest rates to remain "exceptionally" low for some time, a subtle commitment to the current policy that could help bring down longer-term interest rates.

In normal times, lower rates reduce the cost of borrowing for households, businesses and financial institutions, which spurs borrowing and economic activity. Those effects are being muted now, however, because many businesses and households are weighed down by heavy debts.

Still, stocks rallied on the news of the Fed's action. The Dow Jones Industrial Average finished at 8924.14, up 359.61 points, or 4.2%, on the day. Treasury bonds rallied, sending their yields lower. Yields on 10-year Treasury notes hit 2.269%. The dollar sank against the euro and the yen.

A number of official borrowing rates -- such as rates on three-month Treasury bills -- have tumbled to near zero, a level they haven't been near since the Great Depression.
President-elect Barack Obama used the Fed move as a rallying call for more fiscal stimulus, the idea of increased government spending or tax cuts, which Fed officials support.

"We are running out of the traditional ammunition that's used in a recession, which is to lower interest rates," Mr. Obama said in a news conference. "They're getting to be about as low as they can go. And although the Fed is still going to have more tools available to it, it is critical that the other branches of government step up."

The trouble for Fed officials is that while official borrowing rates are very low, interest rates for borrowers with even a modicum of risk remain far above levels of a few months ago, which is squeezing the economy.

Beyond lowering interest rates, the central bank said it could expand lending programs, including a plan to buy mortgage-backed securities. The Fed also said it was studying such rescue measures as purchasing U.S. Treasury securities, which could help reduce long-term borrowing rates.

Sixteen months into a campaign to lift the U.S. economy from a gathering financial storm, the Fed's efforts have so far failed, despite cutting interest rates more than five percentage points. In the latest example of the deepening recession, the Commerce Department said new home building dropped 19% in November, to a seasonally adjusted annual rate of 625,000 units, a record monthly low.

"The Fed gets an 'A' or 'A-minus' for effort and not very good marks for results," said Alan Blinder, a Princeton economist and former Fed vice chairman.

Meantime, consumer prices posted their second straight record monthly drop, with the consumer price index falling by 1.7% in November. Gasoline prices tumbled, while car dealers, retailers and others stepped up their discounting to move goods and sell services.

In a sign that inflation is decelerating sharply, core consumer prices, which exclude volatile food and energy prices, were unchanged in November. In the past three months, they have risen at an annual rate of just 0.4%.

Price declines have helped many consumers in the short run, but a longer-run bout of falling consumer prices could be dangerous, giving households even more incentive to slow spending and hoard cash.

Persistently falling prices also raise the real cost of borrowing for businesses and households, and thus Fed officials are determined to try to avoid it. A senior Fed official said after the meeting that the central bank isn't now worried about deflation, but expects the inflation rate to decelerate further.

Officials spent much of two days of meetings deliberating over what other rescue steps the central bank could take as interest rates approach zero. Mr. Bernanke spent much of his academic career studying that and other questions related to financial crises, and the Fed is now employing almost every prescription he laid out in the past.

The approach carries several risks. It could eventually lead to the opposite of the current problem: higher inflation. It also exposes the independent central bank to political meddling and to losses on loans. Then there's the risk that it won't work.

The Fed has already started a campaign to lend directly to damaged financial markets and companies -- nearly anyone with collateral. Its statement Tuesday said those efforts could "sustain the size of the Federal Reserve's balance sheet at a high level."

By such lending, officials have effectively concluded that if banks and financial markets won't extend credit, it will do part of the job for them.

Two large Fed programs are still being ramped up. In one, the central bank has said it will buy as much as $600 billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses.

So far, the Fed has only committed $8 billion to those purchases. Officials were relieved that mortgage rates have fallen since announcing the program last month. Rates on a conforming 30-year mortgages have dropped to 5.28% from 6.64% since the Fed's last meeting, according to HSH Associates, a financial publishing firm.

Read more: http://online.wsj.com/article/SB122945283457211111.html

Bear Markets Started in October 2007

How long will the latest bear markets last? 18 months or 24 months or...?

For future reference.

Quote of the Day

"Give a man some monies, he who is frugal can save some, but he who is a big spender will consume every penny." - value-life

The History of Bear Markets

Words of Wisdom from Kenneth Fisher

Stocks to Survive On
Ken Fisher (10.02.08)

Though I walk through the valley of the shadow of death I fear no evil. Seems that almost everyone else does, though. Most investors need their investments to last them a long, long time, yet they're acting like the next few months are everything. The shadow of death is an illusion. In the long term equities always do well. They will now, too, even if they fall further first.

My firm has 25,000 high-net-worth clients. A typical account would be that of a couple aged 65 and 60 who need their money to last the rest of their lives, 25 to 35 years. They have a long time to go, and they accomplish nothing by getting in and out of the market from fear now. Yet such folks are so overloaded by the doom and gloom they hear around them that many must be re-reminded of their primary purpose and long-term needs.

If you have a time horizon that long, even a 9% minicrash, such as we had on Sept. 29, is something you can take in stride. Over long periods equities have always done well compared with other liquid alternatives. Even if you have a shorter time horizon, such as a decade, you know that stocks are more likely than not to recover from a market decline.

I hear 60-year-olds say nonsense like, "I won't be able to retire because of the market's downturn." That's ridiculous. History has seen many similar bear markets. Yet folks have kept retiring. The next bull market more than makes up for what we lost in the last decline. The average bull market, of which there have been ten since World War II, takes stock up 150% before the cycle turns. The average 12-month rebound from the bottom is 36%. No, I don't know where the bottom is. I just know that stocks don't go down and stay down.

We can argue about where stocks are headed, and there are always two sides to the argument. But put that aside. Think longer. Unless you are in your late 80s and were an adult as World War II ended, stocks are cheaper, adjusted for tax rates and interest rates, than they've been at any time in your adult life. That's a simply stunning statement looking forward. You're walking forward. Stop myopically looking at your feet and focus on the horizon. Just buy great franchises at cheap prices now and be patient. Here are some long-horizon stocks I like now.

Looking past all the immediate hysteria, focusing several years ahead, it's hard for me to see cheaper oil. Hence simple, strong holdings like Norway's StatoilHydro (24, STO) seem logical. As a vertically integrated oil and gas firm with $220 a share of proven reserves, this $89 billion (in revenue) business will keep growing steadily. It sells for ten times likely earnings in 2009 and one times revenue. It offers a 3.75% dividend yield.

The world believes McCain or Obama, and Congress, will beat up on the drug stocks. Hence they sell like nongrowth stocks. I suspect that, as happened when the Clintons were terrorizing the health care industry, the antipharma movement will generate more rhetoric than action. How can Congress curb drug companies without hurting the baby boomers who need their products?

You don't need Viagra to get excited about Pfizer. It's the world's largest drug producer, with such blockbusters as Lipitor for cholesterol, Celebrex for arthritis and Lyrica for epilepsy. As these come off patent, Pfizer will be drawing new revenue from Sutent for cancer and Chantix to help smokers stop. Pfizer sells at less than ten times likely 2009 earnings, with a 7% dividend yield.

Another buy is Bank of America. Built on acquisition and consolidation, Bank of America is the world's largest consumer bank. It has used the credit meltdown to make smart and cheap acquisitions of Countrywide, to make it the largest mortgage lender, and now of Merrill Lynch, to give it the largest securities distribution force. Having made fewer mistakes than its peers, it's marvelously positioned looking a few years out, yet it sells at ten times next year's earnings, with a 7.6% dividend yield.

Celanese, though much smaller, is a globally diversified second-tier chemical company. Its chemicals are used to make industrial colorants, paints, adhesives and complex polymers for most basic industries. It's not exciting, but it's fundamental and cheap. Its markets won't go away. If you buy now at 70% of revenue and six times 2008 earnings, you've got to win a few years out.

Carpetmaker Mohawk Industries has seen its stock sink for four years because of the collapse in housing. But the much larger nonresidential construction market should pick up the slack. It sells at 60% of revenue and 15 times depressed current earnings.

Unemployment Rate To Rise In Malaysia

US tech firms in Malaysia face falling sales, job cuts
Source: Bloomberg

SALES by US electronics makers in Malaysia will fall this year and next as a global recession saps demand for Dell Inc computers and other devices, the head of an industry group said.

Electronics manufacturers in the Southeast Asian nation will probably have to cut jobs next year after reducing overtime and letting workers take longer Christmas holidays this year to lower costs, said Wong Siew Hai, chairman of the Kuala Lumpur-based American Malaysian Chamber of Commerce’s electronics industry group.

“They are very uncertain and very concerned,” Wong said in a telephone interview yesterday from Penang, a manufacturing base for Dell, Intel Corp and other US companies. “Next year you will see the real impact. If there’s a world recession and the economic impact is going to be great, they have to do something, nobody will be spared.”

Malaysia cut interest rates for the first time since 2003 this week, seeking to bolster domestic demand as recessions in the US, Japan and Europe hurt exports and threaten factory jobs across Asia. Retrenchments in Malaysia’s manufacturing industry jumped almost five-fold to 10,182 in the third quarter, central bank data show.

“It’s inevitable when the operating environment slows down, you should expect a rise in retrenchments,” said Lee Heng Guie, chief economist at CIMB Investment Bank Bhd in Kuala Lumpur.

Malaysia’s unemployment rate may rise to as high as 4.2 per cent from 3.6 per cent now as job cuts in 2008 will likely exceed the average of the past five years, he said.

Production Falls

Export sales by the American Chamber’s 17 electronics companies may decline this year, instead of growing 0.4 per cent as predicted in July, Wong said. Sales, which gained 7.1 per cent to RM73.8 billion (US$20.4 billion) in 2007, may fall further next year, he said.

The government, which has announced a RM7 billion spending plan to spur growth, needs to help manufacturers by cutting utility costs, Wong said.

Electronics companies are only able to forecast orders weeks ahead now, down from monthly and quarterly projections previously, he said.

“The visibility is very short, things are changing very fast,” Wong said. “This seems like the worst crisis so far.” Most if not all of the industry group’s members have reduced overtime work at their factories, and more than half plan to have longer-than-normal Christmas production shutdowns, he said.

Some are considering shorter work weeks and have delayed their capital investment to “conserve costs,” he added.

Malaysia’s industrial production fell for the first time in 18 months in September. The government this month slashed its growth forecast for 2009 to an eight-year low of 3.5 per cent and predicted a decline in exports next year as the worst financial crisis since the Great Depression pushed economies from Singapore to New Zealand into recession.

Intel, Motorola Inc and other US electronics makers account for about 12 per cent of Malaysia’s total exports, and more than a quarter of the country’s electronics shipments.

US Economy vs Stock Market

During the period of 1998-2008, the US economy grew by a staggering 65.5%! On the other hand, US stock market's performance looks pale in comparison with its economy. DowJones, the indicator of US stock market performance as a whole, contracted by 7.5% for the last ten years! Is it amazing?? The stock market index, which is also supposely track the performance of the economy of the country, did not match the underlying economy. The economy grew substantially but not the stock market!! Interest rate is below 1%. Borrowing is cheap! Money is cheap! Do you see what I foresee? Cheers!!!

Worst Recession in German Since 1996

German Economy Enters Worst Recession in 12 Years (Update2)
By Gabi Thesing

Nov. 13 (Bloomberg) -- The German economy, Europe's largest, contracted more than economists expected in the third quarter, confirming it has entered its worst recession in at least 12 years as the global financial crisis curbs exports.

Gross domestic product dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell a revised 0.4 percent, the Federal Statistics Office in Wiesbaden said today.

Economists expected a 0.2 percent decline, the median of 40 forecasts in a Bloomberg News survey showed. The economy last contracted this much over two consecutive quarters -- the technical definition of a recession -- in 1996.

German companies are scaling back production as slower global growth erodes export demand. Siemens AG, Europe's largest engineering company, plans to cut 16,750 jobs by 2010 as profit declines. Germany's benchmark DAX Index has tumbled more than 40 percent this year, business confidence fell to a five-year low last month and manufacturing orders plunged in September.

``The German recession has begun in earnest and it's very serious,'' said Holger Schmieding, Chief European Economist at Bank of America Corp. in London. ``It raises the risk of a German contraction of more than 1 percent next year and we will have to revise down our forecast for the euro area as well.''

Eurostat, the European Union's statistics arm, will publish third-quarter growth data for the euro region tomorrow. The euro dropped more than a cent to $1.2388 after the German report.
Exports Hurt

In the year, the economy grew 0.8 percent when adjusted for the number of working days, the statistics office said. The third-quarter slowdown was led by trade as exports weakened and imports rose. Consumer and government spending improved ``slightly,'' the office said.

Last week, the International Monetary Fund predicted economic contractions in the U.S., Japan and euro area next year, with Germany's economy forecast to shrink 0.8 percent.

The European Commission said on Nov. 3 that the 15-nation euro region is probably already in a recession. Just over 40 percent of German exports go to other euro-area nations.

Households may spend less and save more as companies retrench. Continental AG, which makes auto parts, plans to jettison 5,000 temporary workers and extend holiday production breaks.

General Motors Corp.'s Adam Opel brand closed plants in Eisenach and Bochum for three and two weeks respectively to reduce production, forcing workers to take a vacation.

`Shock Waves'
``The shock waves pushed out by the financial crisis have hit Germany full on, if later'' than other countries, the government's five independent economic advisers said yesterday. They called on Chancellor Angela Merkel to expand a 50 billion- euro ($63 billion) fiscal stimulus package to help revive growth.

Siemens Chief Executive Officer Peter Loescher today said next year's profit goals have become ``more ambitious'' after the company reported a bigger decline in fourth-quarter earnings than analysts had expected.

Deutsche Lufthansa AG, Europe's second-biggest airline, said it filled fewer seats on its aircraft last month as the cooling economy deterred business and leisure travel.

Ralph Solveen, an economist at Commerzbank AG in Frankfurt, expects a ``marginal'' recovery in the second half of next year.

``The German economy would have cooled regardless of the financial crisis, which just gave it the final push into recession,'' he said. ``The factors that slowed German growth earlier this year such as high inflation, a strong euro and tight monetary policy are all disappearing, which should feed through to the economy next year.''

Upward Revisions
The statistics office revised first-quarter growth to 1.4 percent from 1.3 percent and raised its second-quarter estimate from a 0.5 percent decline. It will publish a detailed breakdown for the third quarter on Nov. 25.

The turmoil that began with the U.S. housing slump drove Lehman Brothers Holdings Inc. into bankruptcy in September and caused the biggest global stock sell-off in 70 years. The world's largest financial companies have posted almost $1 trillion in writedowns since the start of last year, when the collapse of the U.S. subprime mortgage market triggered a credit shortage.

With growth slowing around the world, oil prices have collapsed to $56 a barrel yesterday from a peak of $147 in July, easing inflation pressure and giving central banks from Washington to Beijing room to slash interest rates. The euro has dropped 20 percent against the dollar in the past four months.

Investors expect the European Central Bank to lower its benchmark rate by at least half a percentage point at its next meeting on Dec. 4, Eonia forward contracts show. That would be the sharpest rate reduction in the bank's 10-year history after its two half-point cuts in the past month to 3.25 percent.

Germany still faces ``a long, drawn-out recession,'' said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt, who forecasts the economy will shrink 1.5 percent next year, the most since the aftermath of World War II. ``Unfortunately, we don't see any respite any time soon. Where should the growth come from?''

General Motors - The Next Bear Stearns?

GM's Skid Quickens as Crunch Raises Bankruptcy Threat (Update1)
By Mike Ramsey

Nov. 11 (Bloomberg) -- General Motors Corp., burning cash as U.S. sales slide, is being pushed closer to bankruptcy as it waits to learn whether the auto industry will win a new round of government loans.

Only federal aid can prevent a collapse by the largest U.S. automaker, analysts including Buckingham Research Group's Joseph Amaturo said yesterday as the shares plunged to a 59-year low. Reorganizing in court protection also may not be possible, because the credit crunch has dried up financing.

``Strategic bankruptcy is not an option for GM,'' said Mark Oline, a credit analyst with Fitch Inc. in Chicago. ``This is an issue of operating or not operating.''

The prospect of a forced liquidation raises the stakes for GM's quest for new federal borrowing after saying on Nov. 7 it may run out of operating cash as soon as year's end. GM had $16.2 billion on hand as of Sept. 30, down from $21 billion at the end of June, and needs $11 billion to pay its monthly bills.

``A bankruptcy wouldn't address our immediate liquidity concerns,'' said Renee Rashid-Merem, a spokeswoman for Detroit- based GM. ``It's not an option for GM because it creates more problems than it solves.''

GM's U.S. sales, which fell 21 percent last quarter and 45 percent in October, ``would be devastated'' by a bankruptcy filing, Chief Executive Officer Rick Wagoner said in a Nov. 7 Bloomberg Television interview. The ``unimaginable consequence'' of a bankruptcy ``motivates us to really come up with cash in every way possible,'' he said.

Obama-Bush Talks
Wagoner, 55, is cutting jobs and shutting plants after almost $73 billion in losses since the end of 2004. He told trade publication Automotive News that GM needs an aid package before President-elect Barack Obama takes office in January. Obama spoke with President George W. Bush about the urgency for aid to U.S. carmakers during discussions about the economy at a private White House meeting, aides to the president-elect said.

Investors may be concluding that GM won't succeed. The stock slid yesterday, chopping $600 million from GM's market value, to about $2.05 billion after Deutsche Bank AG said the shares may be worthless in a year.

GM fell $1 to $3.36, the lowest since 1949, in New York Stock Exchange composite trading yesterday. The stock traded in Germany was down a further 0.7 percent at $3.34 as of 10:14 a.m. in Frankfurt trading.

Carmakers' Aid Request
GM, Ford Motor Co. and Chrysler LLC have asked for $50 billion in aid to weather the worst auto market in 17 years, people familiar with the discussions said. That would be in addition to $25 billion approved in September to help retool plants to build more fuel-efficient vehicles.

``There's growing support in Washington, in Congress, to give government assistance to GM and the other automakers,'' said Bruce Zirinsky, co-chairman of the financial restructuring department of Cadwalader, Wickersham & Taft LLP in New York. ``The question is going to be how that gets done and at what price to the shareholders and creditors.''

The White House signaled its opposition yesterday to a proposal by House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada for Treasury Secretary Henry Paulson to tap the $700 billion bank-rescue package to aid automakers.

Democratic lawmakers reject Paulson's arguments that he lacks authority to do so, Senator Carl Levin of Michigan said yesterday in an interview.

Legislation's Wording
Should Paulson continue to resist using funds from the financial bailout approach, Congress would craft language to help the automakers and add it to the stimulus plan to be considered next week, Levin said. Treasury spokeswoman Brookly McLaughlin referred questions to the White House.

The failure of GM in an event where the company stops production would cost 2.5 million jobs in the U.S. in the first year, according to a study by the Center for Automotive Research in Ann Arbor, Michigan.

That scenario is surfacing because of the shortage of financing to let companies keep operating in court protection, meaning GM might be unable to borrow and stay in business should it be forced to file for bankruptcy.

So-called debtor-in-possession loans to bankrupt companies have ``all but shut down,'' CreditSights Inc. said yesterday in a report. The loans, which are paid off when companies exit court protection, aren't being made as lenders become more averse to risk, wrote Chris Taggert, a New York-based analyst.

``In this world, you don't go Chapter 11 reorganization,'' Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut, said in an interview. ``You go Chapter 7 liquidation.''

Will GM goes bankrupt? In my opinion, it is highly unlikely. If GM fails, 2.5 million employees will be out of work! This will add up about 1.5% to October unemployment rate of 6.5% = 8%. With the layoffs, consumer spending would be hardly hit and US will definitely goes into a deep and long recession. Oil price will go down, and corporate profits will decline significantly. A lot of bad news will come out soon. Be patient. What say you?

Oil prices near bottom?

Oil prices near US$60 on recession fears
Source: msnbc

HOUSTON: Oil prices neared $60 a barrel Thursday, their lowest point in about a year and a half, as a growing number of economic reports point to a long and painful recession.

The number of Americans continuing to draw unemployment benefits surged to a 25-year high, the Labor Department said Thursday, and the U.S. retailers saw their sales plummet last month to the weakest October level since at least 1969.

When the economy slows, the demand for energy fades.

One side effect: the price of gasoline has tumbled from summer highs, when a gallon cost more than $4.

Experts say gasoline could cost half that by year's end.

Light, sweet crude for December delivery fell 7 percent, or $4.53, to settle at $60.77 a barrel on the New York Mercantile Exchange.

Prices tumbled as low as $60.16 at one point, a level last seen in March 2007. In London, December Brent crude fell $4.44 to settle at $57.43 on the ICE Futures exchange.

Oil prices have now fallen nearly 60 percent since peaking at $147.27 a barrel in mid-July.

They surged above $70 Tuesday, but a crude sell-off began the following day when prices dipped 7.4 percent.

Analyst and trader Stephen Schork said the sharp decline is fallout from a yearlong bubble.
Some investors and lawmakers in Washington have blamed speculative traders for bidding up the price of oil.

"It's the old adage: markets fall faster than they rise. And this is exactly what we're seeing right now,'' Schork said.

"We knew it was a bubble on the way up. People stopped acting rationally. High prices became the justification for high prices. Fundamentals be damned.''

Also pressuring crude prices Thursday were interest rate cuts across Europe, where economic leaders were trying to spark growth.

Oil analyst Peter Beutel of Cameron Hanover said crude was falling because of a stronger dollar, renewed fears of recession and weaker equities markets.

"Oil prices ... have been searching for a bottom for the last several days,'' a Cameron Hanover report said.

And despite a government report showing storage levels in the U.S. rose less than expected last week, prices for natural gas fell, too.

Meteorologist predictions of a cold winter have been pushing up natural gas prices recently.
In its weekly report, the Energy Department's Energy Information Administration said natural-gas inventories held in underground storage in the lower 48 states rose by 12 billion cubic feet to about 3.41 trillion cubic feet for the week ending Oct. 31.

Analysts had expected a boost of between 20 billion to 25 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

"The (EIA) report was kind of bullish actually and the market went the other way,'' said Phil Flynn, an analyst at Alaron Trading Corp.

"It's just the overall malaise. Earnings today haven't been anything to write home about. We're readjusting commodities based on recessionary-like numbers.''

Wall Street slumped again Thursday, sending stocks lower for a second day after Cisco Systems Inc. reported crumbling demand.

The Dow Jones industrial average fell about 443 points, or 4.9 percent.

The dollar strengthened after the European Central Bank cut its key rate by half a percentage point to 3.25 percent Thursday, joining the Bank of England, Swiss and Czech central banks as they confront a looming recession.

The ECB announced the cut from 3.75 percent shortly after the Bank of England lowered its key interest rate by a startling 1.5 percentage points to 3 percent.
The Bank of England's cut was more than the full percentage point that most analysts had predicted and the biggest cut in 27 years.

Commodities such as oil are used as a hedge against inflation and a weak dollar.

When a central bank cuts interest rates, it tends to weaken that nation's currency, meaning the dollar typically trades higher against it.

When the dollar strengthens, it makes oil more expensive to buyers dealing in other currencies. But the continuing parade of dim economic reports weighed on global markets and on the price of oil as well.

Retailers' October sales figures showed consumers pulling back spending sharply.

A Labor Department report said the number of people continuing to draw unemployment benefits jumped by 122,000 to 3.84 million in late October.

It was the highest level since late February 1983, when the country was struggling to recover from a long and painful recession.

Other economic indicators out of the U.S. this week suggest the world's largest economy may be heading for its worst recession in decades.

A Commerce Department report Tuesday said factory orders fell 2.5 percent in September from August, much worse than analysts had predicted.

On Monday, U.S. manufacturers reported poor figures for October, showing the worst reading in more than a quarter century.

In other Nymex trading, gasoline futures fell 8.8 cents to settle at $1.336 a gallon.
Heating oil dropped 11 cents to settle at $1.942 a gallon while natural gas for December delivery fell 27 cents to setttle at $6.979 per 1,000 cubic feet.