Stocks Chilled by GM, Jobs Data

Stocks traded lower for nearly the entire session on Friday, with all major indices pushing closer to mid-July depths after a mid-week run-up.

The damper du jour on the markets was two-fold. General Motors reported a $15.5 billion loss in the second quarter, with July sales falling 32% from a year ago. On the economic news front, the Labor Department reported non-farm payrolls for July down another 51,000, marking the 7th consecutive month of job losses. The "official" unemployment rate rose for the sixth straight month, to 5.7%, the highest in 4 years.

With those items greeting investors this morning, there was little euphoria on Wall Street as the week came to an end and the month of August began with an inauspicious start.

Dow 11,326.32 -51.70; NASDAQ 2,310.96 -14.59; S&P 500 1,260.31 -7.07; NYSE Composite 8,379.15 -59.49

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Advancers and decliners were nearly even in lackluster, low-volume trading, with gainers holding a slim edge, 2972-2969. There were 261 new lows and just 87 new highs.

Crude oil gained $1.02, to $125.10. Gold $5.20, to $917.50, while silver dropped another 27 cents, to $17.52. The metals are still exhibiting signs of cracking, indicative of global recession.

.... and that's the good news for the week. Good luck.

NYSE Volume 1,226,226,000
NASDAQ Volume 2,188,498,000

Despite Earnings Upsides, Markets Tank

A disappointing preliminary reading on second quarter GDP, showing expansion at a 1.9% annual rate (optimistic analysts were expecting 2.3%), sent stocks into another decline on Thursday, though losses were somewhat tempered due to a 2% drop in oil prices and strong earnings from some widely-held companies.

Dow 11,378.02 -205.67; NASDAQ 2,325.55 -4.17; S&P 500 1,267.38 -16.88; NYSE Composite 8,438.64 -126.67

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Jobless claims climbed 44,000 to 448,000, the third time in the last five weeks claims have been above the 400,000 level. The four-week moving average sailed 11,000 higher, to 393,000.

CBS Corp. (CBS), Altria (MO), Motorola (MOT), Disney (DIS), MasterCard (MA), Visa (V), and Tyco (TYC) all reported positive earnings results prior to the opening bell, though those pluses were not enough to stem the waves of selling that engulfed the markets.

Advancing issues were beaten back by decliners, 2656-3617. New lows were, as usual, ahead of new highs, though not by a substantial margin, 225-103.

Light Sweet Crude Oil for September delivery fell $2.69, to $124.08
Gold gained $10.40, to $922.70, and silver also rebounded, up 33 cents to $17.79 per ounce.

Release of July employment data in the Labor Department's Non-farm payroll report has investors somewhat spooked. Analysts are expecting the 6th straight month of job losses, roughly -72,000.

Oddly enough, many on the Street still put faith into the government's massively massaged numbers. For instance, it was revealed today that the economy actually shrank 0.2% in the 4th quarter of 2007, when earlier figures showed a minute gain of 0.6%.

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The employment figures are even more of a statistical shroud, based on faulty data collection measures and a dubious calculation method. The worst feature of employment-unemployment data is where people whose unemployment insurance has expired are taken out of the equation completely, rather than counted as continuing unemployed.

It is ever prudent to interpret government data with a wide berth. No figures are ever finalized until months later, and even then - in addition to being irrelevant due to dating - may be a stretch from reality.

With the current administration's continuing effort to jawbone the economy into better condition, the rule of thumb is to consider all data releases at 10-20% better than what is actual.

Generally speaking, the markets and anecdotal evidence reflect reality better than government figures. Only some federal number-crunchers and a select minority of analysts actually believe that a recession has been avoided. The rest of the world already knew that the final quarter of '07 and the first quarter of '08 were in decline, meeting the classical definition of a recession.

NYSE Volume 1,456,028,000
NASDAQ Volume 2,357,763,000

Stocks Soar, So Does Oil

While the NASDAQ spent most of the day in the red, the Dow maintained a positive posture throughout the session, then sprinted to the finish, with the major indices closing at their highs of the day for the second session in a row.

There was little in the way of news except from the oil fields, where an unexpected drop in US gasoline supply sent oil rocketing upwards nearly $5 per barrel.

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With the focus on oil prices and the financial sector, earnings from Hess Corporation (HES) set the tone with a 62% rise in 2nd quarter profits from a year ago. The gains were attributed mostly to the extraordinary hike in the price of oil and gas and investors piled into the equity, boosting shares by more than 13% (106.97, +12.72).

With roughly 350 companies disclosing earnings, it was difficult to keep track of winners and losers, though most of those reporting early in the day were uninspiring.

On the whole, investors seemed relieved that there was no more discouraging news on housing or credit with which to weigh their fears, and the last hour of trading was spent pushing stocks higher, though without any real impetus.

Dow 11,583.69 +186.13; NASDAQ 2,329.72 +10.10; S&P 500 1,284.26 +21.07; NYSE Composite 8,565.31 +146.11

Advancers led declines, 3840-2397, and new lows remained ahead of new highs, 220-119.

Volume was moderate.

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Crude oil for September delivery closed up $4.58, at $126.77, though the metals continued their recent decline. Gold lost $14.10, closing at $910.30, while silver fell 9 cents to $17.47. The continuing decline in the precious metals is presaging a recession of magnificent proportions.

While the Fed and central bankers work to keep the latches on the credit windows from becoming completely detached, money is flowing out of nearly everything, from real estate to metals to stocks. Recent gains on Wall Street have been fleeting, as there has been no resolution to ongoing credit problems or the implosion of the US banking system.

Things are so broken, every day seems to bring forth a new financial device or instrument to stem the tide of defaults and capital erosion. Sadly, there is little anyone can do at this point. The damage has been wrought and a cataclysmic event could occur at any time, though the Fed and government officials - hell-bent on re-election in November - seem to prefer a slow, but steady Chinese torture approach to the unwinding of the financial system.

Drip, drip, drip....

NYSE Volume 1,472,582,000
NASDAQ Volume 2,270,902,000

Markets Up Sharply As Financials Power Ahead

Investors were treated to a rare turnaround Tuesday as stocks shot up, erasing the declines from Monday in suspicious trade.

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While oil dropped once more, financial stocks were the main focus, racking up outsize gains, despite continuing economic woes. Volume was incredibly light, suggesting organized pumping by the Fed and their Wall Street proxies to keep the indices from falling back to mid-July levels.

Dow 11,397.56 +266.48; NASDAQ 2,319.62 +55.40: S&P 500 1,263.19 +28.82; NYSE Composite 8,419.20 +159.01

Think the market isn't subject to special situations and insider trading? Think again. Here's what briefing.com had to say about the past two days of trading in Merrill Lynch (MER) and the financial sector:

In an effort to reduce its risk exposure and shore up its balance sheet, Merrill Lynch (MER 26.32, +1.99) is selling $30.6 billion worth of U.S. ABS CDOs for only $0.22 on the dollar, or $6.7 billion. The assets were valued at $11.1 billion at the end of the second quarter, meaning the sale will result in a $4.4 billion pretax write-down. Merrill has taken $51.8 billion in write-downs and credit losses since the credit market turmoil began last year -- second only to Citigroup's (C 18.46, +1.03) $54.6 billion.

Merrill also raised $8.55 billion in a common stock offering at $22.50 per share, making the sale dilutive to existing shareholders. Merrill's stock fell 9.5% to a 10-year low shortly after the open, only to rebound and finish the day 8.2% higher. Merrill's stock dropped nearly 12% during the previous session on no specific news item, so the market may have already been pricing in some of the latest write-down and capital raising news.

The financial sector ended the session with a massive 7.5% gain, as traders speculated that the Merrill news indicated better times are ahead for financial firms.

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That final paragraph is nothing more than a guess about how Wall Street reversed Monday's losses. The truth more likely is that of a combined effort by Wall Street's favored banks and brokerages to save their souls.

The US economy remains in tatters. Tuesday's gains were made mostly by the bankers and brokers themselves.

Advancers led decliners, 4660-1651. New lows remained ahead of new highs, 233-80.

Gold 926.40 -11.40
Silver 17.38 -0.09
Light Sweet Crude Oil 122.19 -2.54


NYSE Volume 1,405,967,000
NASDAQ Volume 2,318,781,000

Bank Failures Spook Wall Street

Monday was another in a series of bad days for investors as a pair of bank failures over the weekend rocked the stock market once again, sending the major indices down 2% on average.

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Amidst one of the most serious economic crises in US history, investors of all stripes are losing faith in not only the financial sector, but government leaders and institutions that were supposed to be a safeguard against the kind of wholesale collapse which seems to have overtaken the US economy.

Over the weekend, the FDIC closed two undercapitalized regional banks - First National Bank of Nevada and First Heritage Bank - the sixth and seventh bank failures of 2008. The news was not widely spread until Monday's market open and it hit investors like a ton of bricks.

While the Dow was up briefly in early morning trading, the other indices fell quickly into the red and spent the rest of the day under the flat line and losing ground. Stocks ended at their lows of the day.

Dow 11,131.08 -239.61; NASDAQ 2,264.22 -46.31; S&P 500 1,234.37 -23.39; NYSE Composite 8,260.19 -135.39

Selling was broad-based, with all 10 sectors posting losses. Decliners buried advancing issues by a nearly 3-1 margin, 4611-1660. New lows continued to dominate new highs, 240-71.

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Today's close on the Dow was just 168 points above the recent mid-July bottom of 10,962.54. The other averages are also nearing their recent lows. Volume was very light, but the selling pressure was relentless.

Oil rose $1.47, to $124.73. The metals continued to demonstrate weakness, with gold up a mere 90 cents, to $937.80 and silver off 9 cents, to $17.47 the ounce.

As second quarter earnings continue to roll out, investors are not pleased nor in a mood for any kind of speculation going forward until there is some cataclysmic event or resolution to the housing/credit mess.

NYSE Volume 1,173,196,000
NASDAQ Volume 1,967,769,000