Investments

Wall Street will open for trading today at a two-month high, with investors more optimistic that the worst of the market's rout might be over. But, analysts contend, the real test is still to come. There will be no shortage of economic data and potential corporate news as traders get back to work after the holidays.

Despite the ballooning federal deficit staring Treasury bond investors in the face, the government managed Wednesday to sell a record $30 billion in three-year notes. The notes sold at an annualized yield of just 1.2%. Investors put in a total of $66.3 billion in bids for the securities, which traders said was decent demand, if a bit weaker than expected.

For bond funds, 2008 was spectacular. And disastrous. A 5.2% gain last year in a Barclays Capital index tracking the value of bonds of all kinds obscured the fact that performance in the fixed-income world was all over the map. Investors facing an unpredictable economy dumped corporate and municipal bonds -- as well as stocks -- in favor of the perceived safety of U.S. government securities, driving up their prices while driving down their yields.

There's no sugarcoating what happened to stock mutual funds last year. Wall Street's deepest losses since the 1930s ravaged the fund nest eggs of millions of Americans. There was almost no place to hide. The average domestic stock fund lost 36% in 2008, according to Morningstar Inc. It was worse for foreign stock funds, which for five straight years through 2007 had posted much bigger gains than domestic funds -- in turn luring an avalanche of money from U.S. investors.

The travails of the financial markets could hurt mutual fund investors in more ways than one. In addition to slashing the value of your portfolio, the bear market also has taken a pound of flesh from the companies that manage your mutual funds. That normally wouldn't be a cause for you to be concerned, but it could become one if the industry's troubles linger.

The safety net is almost gone, the nest egg is cracking. Many Americans have recently found themselves changing their retirement plans after losing a substantial amount of home equity as the housing market and the overall U.S. economy struggle. These folks face years of living on fixed incomes from sources such as pensions, 401(k)s, individual retirement accounts and Social Security but don't have the time to recover their losses.

Venture capitalists slammed shut their wallets during the last three months of 2008, investing 45% less in Southern California start-ups than during the same period a year earlier, according to a report scheduled for release today. The sharp fourth-quarter decline, to $422 million from $764 million, turned what was expected to be a full-year gain into a loss, according to the Dow Jones VentureSource report. Venture funding to the region's businesses in 2008 fell 20% to $3.2 billion.

Ellen and Ray Bluemel are retired and healthy, and figure their eight grandchildren will help them stay active for many more years. The question is whether their assets, damaged by plummeting real estate values, will last as long as they do. "I always tell people the good news is that we're living longer and the bad news is that we're living longer," said financial planner Delia Fernandez of Fernandez Financial in Los Alamitos.

The mortgage crisis is seeping into one of the last dry corners of the mortgage business, the regional network of Federal Home Loan Banks, which provide U.S. banks with hundreds of billions of dollars in low-cost funding to support lending to home buyers. The little-known network has grown in importance as banks lose access to other sources of funding because of the credit crunch.

New York Times Co. said Monday that it had reached an agreement for $250 million in financing from companies controlled by billionaire Carlos Slim Helu to help the newspaper publisher meet debt payments as credit markets dry up and the newspaper industry confronts plummeting ad revenue. Banco Inbursa and Inmobiliaria Carso will issue senior unsecured notes due in 2015 with detachable warrants, New York Times said.