The American dollar isn’t nearly as strong as it used to be, according to news that came about this week. Because the United States economy doesn’t look particularly promising at the moment, the dollar fell to a brand new low last week. This news, coupled with the fact that oil prices hit their highest points ever, leaves many economists in the United States with many new worries about the economy.

Among the problems with the US economy are the strangely low earnings from Bank of America, the continually slumping labor market, and the already slumping housing numbers. In addition to that, the Federal Reserve released a report on the economy that was anything but promising.
There has been a ton of pressure added to the credit market in recent weeks, as US banks might be looking at liquidation of their securities in the near future. This news also sparked the increased buying of US Treasury bills, which have long been a safe option for investors. This upswing shows that investors are concerned about the market’s direction and want to play it safe during this time.

Tom di Galoma, a chief executive with Jeffries & Co. had this to say in an interview with Yahoo News. “There are concerns about another rout in the credit market. Housing will be a drag on the economy for the next 12 to 18 months.”
There is also speculation among market veterans that another cut in the federal interest rate is coming either this month or the next. Most felt that the Fed would take action before December.

The government bond market also saw the yield on their three-month Treasury bill slip. The bill dropped 23bp to end up at 3.76%. This marked a three-week low. Other Treasury bonds also saw their stock drop in recent weeks, as the market has taken a hit.
The situation isn’t much better in Europe, where the ten year Bund fell by 4.32%. Over in Asia, the ten year Japanese government bond dropped a remarkable 1.64%, which is just one hundredth of a percentage point above the bond’s month low.
Over in the currency markets, the dollar has also seen a drop. It met a record low when compared to a number of different currencies in the last week. The Euro, on the other hand, made a record high number of $1.43 when compared to the dollar. Speculation has it that potential Fed interest rate cuts have played a role in effecting the situation.

Though there are certainly concerns over what to do about the dollar’s sinking value, all signs point to the federal government staying put at this point. All of the reasons for the dollar’s decline seem to be things that will sort themselves out if they are given the chance. Slumping housing numbers and low rate expectations are contributing factors that should eventually cool down as the value of the dollar increases.
As far as metals go, sterling saw a rise in its value this week. It hit a three-month high against the value of the dollar. This came as a result of above average retail sales data in the United Kingdom, where the economy seems to be heading in the opposite direction.
One of the primary concerns for the US economy comes as a result of the rising costs of US crude oil. With tensions in the Middle East continuing to grow, the price of a barrel of oil rose to nearly $90. This is an all-time high that doesn’t seem likely to come down anytime soon. Platinum and gold also look like they are headed into uncharted, record territory.

It can be quite discouraging for investors when debacles like auditing scandals or Enron bankruptcy happen. They wonder if the risk they are taking by investing in stocks is worth it. These apprehensions stem from some common myths about investing stocks. Investors need to have a realistic idea of the stock market before they take the plunge. Five of the most common myths are discussed below.

1) Stock Market Investment is akin to gambling.

This misconception would sound very ridiculous for stock market experts. This is one of the primary reasons why most people shy away from stock market investments. For these people, shares are like a trading vehicle. They forget the fact that buying shares is buying a part-ownership of a company. Whenever a company generates profits, the holder of the shares is entitled to receive a part of it. It also entitles him to a claim on the assets of the company. Stock prices fluctuate when investors constantly attempt to assess the profits left over for shareholders. Moreover, a company’s outlook and its future earnings always keep changing. These fluctuations are quite natural.

Gambling creates no value in a transaction. It is like taking money from one person to give to another. Investing, on the other hand, leads to growth of the economy. As the economy grows, there is greater competition amongst companies leading to an increase in productivity. As a result, they manufacture products that better our lives.

2) The Stock Market is a club restricted to brokers and affluent people alone.

Recent studies have shown that anybody can invest in stocks. You need not have a lot of experience in analyzing stocks. Although brokers claim that they can predict the market, their prognostics have been inaccurate most of the time. As a consumer, you are empowered with the most effective tool – the internet. You have the access to all data and research about the market, which was available only to brokerages earlier.

As individuals, you are not under a lot of pressure to produce high returns in a short period, unlike money managers. Hence, you can afford to be long-term oriented.

3) Fallen stocks will rise eventually

This misconception could prove very disastrous for investors. It might sound like a good idea to buy a stock that hit a high recently, but fell back sharply. You do it with the hope that the stock will rise up to those levels again. The hard truth is – a fall in market price is never a good reason to buy a company’s stocks. A better way to do it is to buy a good stock at a reasonable price.

4) Stocks that rise must come down.

The law of gravitation has no connection to the stock market. This myth often forces people to wait till the stock value comes down before they can invest again. Eventually, the stock keeps rising and they end up regretting not having bought it at a lower price.

5) Investing in the stock market requires only a little knowledge.

It cannot be denied that knowing a little is better than knowing nothing. However, when you are investing in the stock market, you need to have a clear understanding of what you are doing with your money. Do not invest when you have not done enough research and gathered enough data to help you take a wise decision.

If you feel you cannot do it all by yourself, there is no harm in hiring an advisor. Hiring an investor costs far lesser than the losses you might incur if you invest in something you do not understand.

Remember the old adage, ‘a little learning is a dangerous thing,’ before you invest in the stock market. As an individual, you must have a clear understanding of how stocks function. And remember, popular misconceptions are not the ultimate truth. Make sure you are demystified about the stock market before you spend your money.

Takeovers and takeover rumors have been running rampant on Wall Street lately. While takeovers usually have a bad connotation, the result of the rumors and official announcements have been assisting the US stock market in staying positive for the most part. The market is set up to open higher today as reports surfaced that Alcan, Inc. refused a $26.7 billion takeover bid from Alcoa, Inc. Rumor has it that Alcan, Inc. is discussing a merger with BHP Billiton, but also stated that it may make a bid for Alcoa, Inc. This news has investors thinking that bids from other companies will soon follow. Other takeovers that seem to be moving the market include Morgan Stanley’s plans to acquire Crescent Real Estate for a reported $6.5 billion. Also, discount shoe retailer Payless ShoeSource is purchasing the children’s favorite in shoes, Stride Rite for approximately $800 million. One other purchase worth noting is Amazon.com’s announcement Wednesday morning to widen their book selection by purchasing Brilliance Audio, who is an independent publisher of audio books.

While the market is set to open higher due to takeovers and acquisitions, investors are waiting to hear about the gasoline inventory report. With Memorial Day weekend ushering in the unofficial start of summer beginning late Friday afternoon as people leave work, demands for gas will be high as people are traveling to the beach and other mini-vacation destinations. The gasoline inventory report will show whether or not US refiners have produced enough gas to meet demands for this weekend and this report will surely be one to make the market move. There are no other economic reports due out today, however, Treasury Secretary Paulson is set to report on trade talks with the Chinese officials. Thursday will see the Commerce Department’s report on durable goods. In anticipation of this report, investors may go ahead and take their trading positions a day in advance.

Tuesday saw several companies post profits. Among the companies that reported include Forest Laboratories, Inc. and Cypress Biosciences Inc. These companies reported that their study involving a late-stage Alzheimer’s drug is showing extremely promising results. Their announcement forced their stock shares to go up in after hours trading. Other market movers include, The Target Corporation who reported just before the opening bell on Wednesday. Their first quarter financial reports revealed an 18 percent increase. While this is excellent news for the second largest discount retailer in the United States, it is still shy of expectations. The 18 percent increase equates to almost $651 million dollars or 75 cents a share.

Earlier this year Target reported that same-store sales for April were down 6.1 percent. Target placed the blame for the decrease in profits on an earlier Easter. However, their February and March sales prove strong enough to curb any other profit losses. Prior to the opening bell, Target’s shares soared $1.71 per share. Ross Stores also reported before the opening bell and they too had good news to share. The discount retailer of clothes and accessories reported a .43 cent increase per share of stock. This is inline with both the company’s and analyst’s expectations. Medtronic also announced a surprising profit increase last night that left it stock shares increasing by 4% this morning. Finally Gamestop as well reported prior to the opening bell and was able to beat all estimates by .02 cents per share making their total profit increase .18 cents per share. Many other retailers are also set to report on Wednesday, including Abercrombie & Fitch as well as the Limited Company. Investors should keep in mind that the markets will be closed on Monday, May 28 in observance of Memorial Day.

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