U.S. Markets Take Hit, Manufacturing Increases

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The stock market's six-month rally took a hit Tuesday and stocks saw their biggest losses in two weeks.
    
Analysts say worries about banks and the overall economy are to blame.  But there are also some upbeat economic reports.

When it comes to today's economy and the markets, financial analysts say investors are worried about September, because it is the worst month for the stock market.
    
However, an increase in new home construction, homes sales, and manufacturing has President Barack Obama sounding optimistic.

"This means greater production of transportation, such as cars, and electronic equipment, like computers and appliances," Obama said. "And it means these companies are starting to invest more and produce more. And it is a sign that we're on the path to economic recovery."
    
Manufacturing grew 4 percent after shrinking for 18 straight months.  Construction of homes and apartments rose by 2.3 percent.
    
Pending home sales rose 3.2 percent.
   
Analysts point to two government initiatives for the gains.

"First a tax credit for first time buyers, and the Fed is buying mortgage securities that lowers interest rates," said senior economist Julia Coronado of BNP Paribas Bank in France. "If you are a home buyer the tax credit is going to go away and the mortgage rates will go up next year so a lot of buyers are coming in and getting while the getting is good."
    
That Cash for Clunkers program sent buyers into car dealer's showrooms and lots across the country.
    
It also gave car marketers -- like the Ford Motor Company-- a 17 percent boost.
    
But auto market analysts now say that could be not-so-good news for the industry.
 
"And I think that's really dangerous moving forward because sales for the rest of the year look pretty bleak," said Edmunds.com senior analyst Jessica Caldwell.

Meanwhile, Bank of America is reportedly ready to repay the government a portion of the money it received -- about $20 billion.

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