Market Snapshot August 17, 2009, 4:30PM EST

Stocks Stumble on Growth Worries

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Bloomberg reports foreigners bought a total $90.7 billion of long-term equities, notes and bonds in May, more than forecast and compared with net sales of $19.4 billion in May, the Treasury said. Net buying of U.S. government notes and bonds totaled $100.5 billion, the most since records began in 1977, after net selling of $22.6 billion in May. Investors in Japan and the U.K. increased their holdings of U.S. assets as the Obama administration sold debt to finance a record budget deficit and fund economic stimulus spending. Total monthly foreign investment flows were down $31.2 billion in June, compared with sales of $65.7 billion in May.

The Federal Reserve extended its Term Asset-Backed Securities Loan Facility (TALF) program through March 31, 2010 to help promote credit flows to businesses and households, although the central bank does not expect to add any further types of collateral eligible for the facility. The Fed said despite the improvement in the financial markets in recent months, the markets for ABS and CMBS still remain impaired, and could remain so for some time.

The Wall Street Journal reports banks in the U.S. that failed in the past two years were in far worse shape than those that collapsed during the industry's last crisis, a looming problem for the government agency charged with insuring deposits. At three of the five banks that failed Friday, increasing the total to 77 so far this year, the financial hit to the agency's deposit-insurance fund is expected by the FDIC to be about 50% of their assets.

BB&T Corp. (BBT) announced that it had acquired the banking operations of one of the institutions that failed Friday, Colonial Bank of Montgomery, Ala. BB&T has acquired $22 billion in assets and assumed $20 billion in deposits in the transaction. The FDIC and BB&T have entered into a loss sharing agreement covering substantially all acquired loans and securities. Shares of BBT rose sharply on Friday ahead of the official announcement of this deal, so profit taking in the stock was likely Monday, according to S&P MarketScope.

Bloomberg News reports Wall Street firms are again recruiting commodities traders with promises of $1 million bonuses as prices of raw materials from oil to copper double. Less than a year after oil tumbled a record 54% and the Reuters/Jefferies CRB Index was suffering its biggest drop ever, Bank of America plans to boost commodity headcount by 25%. London-based Barclays Plc will increase staff about 6%. Morgan Stanley is recruiting traders in shipping. The banks declined to comment on compensation. "You are definitely seeing $1 million or more guaranteed bonuses coming back for 2009," said George Stein, managing director at New York-based recruitment firm Commodity Talent LLC.

Bloomberg News reports Citigroup (C), under pressure from the Obama administration to reduce executive compensation, may try to persuade energy trader Andrew Hall to accept stock instead of cash in 2010 after paying him about $100 million last year, people familiar with the matter said. Hall isn't likely to accept such an offer because his pay is based on the performance of the Phibro LLC unit he heads, not the bank's, making the sale of the business more likely as a way of placing him outside the government restrictions, the people said.

The Associated Press and other news services report President Barack Obama is willing to embrace insurance cooperatives over a government-run plan as the White House faces mounting opposition to its broad overhaul of the nation's health care system. Bowing to Republican pressure and offering political cover to fiscally conservative Democrats, Obama's administration signaled on Sunday that it is ready to abandon the idea of giving Americans the option of government-run insurance. The shift leaves open a chance for compromise with Republicans that probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority.