Following two days of extreme movement - one up, one down - the major indices settled into a positive trading range and held on to substantial gains before renewed selling interest in the final hour turned many stocks lower.
Dow 11,268.92 +38.19; NASDAQ 2,228.70 +18.89; S&P 500 1,232.04 +7.53; NYSE Composite 7,957.26 +86.11
The markets traded in herky-jerky fashion throughout the session but retained a positive bias. The massive sell-off into the close, however, had many shaking their heads.
Devoid of any consequential economic reports, traders were forced to deal with the one big headline of the day, as embattled Lehman Brothers (LEH, 7.24, -0.55) issued an earnings pre-announcement which was far worse than anyone expected. The company said it would show a third quarter loss of $3.9 billion, or $5.82 per share and would reduce its annual dividend from 68 cents to 5 cents. Lehman also announced the sale or partial divestiture of much of its other holdings.
Such news was expected, though few thought the devastation would be so complete. Lehman had traded above $60 earlier this year. The stock, like so many others in the financial arena, has lost a massive amount of value - nearly 90%.
With the bailouts of Fannie Mae and Freddie Mac still fresh in the minds of investors, Lehman's fall from grace was yet another dose of bad news for a market that can hardly bear any more.
On the day, gainers managed a narrow edge over losers, 3473-2797. New highs were scarce, with only 66 firms recording 52-week highs. New lows however, were in abundance. There were 545 of those.
More evidence of the popping of the commodities bubble appeared, as gold lost massively, down $29.50, dropping to $762.50 per ounce. Silver also was hammered, sliding 84 cents, to $10.89. Oil fell as well on futures markets, with a barrel of crude worth 68 cents less than yesterday, settling at $102.58 per barrel.
The liquidity crisis continues. Everything, from real estate to stocks to grandpa's coin collection are being sold off as fast as humanly possible with no end in sight. By the time most average folks get an idea that what they own is not nearly worth what they paid, it's likely to be too late and another round of forced divestiture will ensue.
Happy days... not here, not now.
NYSE Volume 1,549,186,000
NASDAQ Volume 2,288,587,000
Wednesday, September 10, 2008
Tuesday, September 9, 2008
Double Dose of Reality for Wall Street; S&P at 27-Month Low
Stocks rose briefly Tuesday morning, but a pair of economic reports on Pending Home Sales and Wholesale Trade and Inventories sent traders running for the sell buttons.
Word from the housing industry was as dreary as ever. The National Association of Realtors' (NAR) index for pending sales of existing homes dropped 3.2% to 86.5 from 89.4 in June.
At the same time that report hit the street - 10:00 am EDT - the wholesale trade numbers showed a marked increase in inventory levels and a slowing of sales in July.
The double-whammy hit Wall Street like a ton of bricks as the NASDAQ dropped below its July bottom and the S&P broke down to a new 2008 low and closed the session at its lowest level since June 2006.
Dow 11,230.73 -280.01; NASDAQ 2,209.81 -59.95; S&P 500 1,224.51 -43.28; NYSE Composite 7,871.15 -297.47
While the Dow held onto a mere 10 points gained from Monday, the losses in the other indices were severe, especially in the NASDAQ and NYSE Composite. The NASDAQ, which was up nearly 14 points on Monday, lost more than 4 times that on Tuesday, dropping almost 60 points. The NYSE Composite lost more than double what it had gained in the previous session. Those two indices constitute the broadest gauges, covering over 6000 individual stocks between them.
Market internals verified that the selling was indeed broad-based and rampant. Gainers were overwhelmed by more than 5-1 by declining issues, with the losers ahead by a score of 5303-1006. New lows continued to swell as new highs retreated. New lows led, 574-103.
The only safe haven was in bonds, which gained slightly, while commodities were blasted lower once more. Crude oil continued its precipitous decline, losing $3.08, to $103.26. Gold shed another $10.50, shattering the psychologically-important $800 barrier, closing in New York at $792.00 per ounce. Silver slid below $12.00, losing 35 cents, to $11.92.
With seemingly nothing but more bad news heading to Wall Street, there seems to be nothing more than investor resolve to keep markets from an all-out rout. Volume has not returned following the Labor Day recess, igniting fears that many market participants have already left for more guarded environs. The past two days' volume have been mirror images, and have been in the moderate range.
Prices, wages and the value of all assets are all now encountering the beginning of a deflationary spiral which will lead to more misery months ahead.
NYSE Volume 1,639,261,000
NASDAQ Volume 2,614,386,000
Word from the housing industry was as dreary as ever. The National Association of Realtors' (NAR) index for pending sales of existing homes dropped 3.2% to 86.5 from 89.4 in June.
At the same time that report hit the street - 10:00 am EDT - the wholesale trade numbers showed a marked increase in inventory levels and a slowing of sales in July.
The double-whammy hit Wall Street like a ton of bricks as the NASDAQ dropped below its July bottom and the S&P broke down to a new 2008 low and closed the session at its lowest level since June 2006.
Dow 11,230.73 -280.01; NASDAQ 2,209.81 -59.95; S&P 500 1,224.51 -43.28; NYSE Composite 7,871.15 -297.47
While the Dow held onto a mere 10 points gained from Monday, the losses in the other indices were severe, especially in the NASDAQ and NYSE Composite. The NASDAQ, which was up nearly 14 points on Monday, lost more than 4 times that on Tuesday, dropping almost 60 points. The NYSE Composite lost more than double what it had gained in the previous session. Those two indices constitute the broadest gauges, covering over 6000 individual stocks between them.
Market internals verified that the selling was indeed broad-based and rampant. Gainers were overwhelmed by more than 5-1 by declining issues, with the losers ahead by a score of 5303-1006. New lows continued to swell as new highs retreated. New lows led, 574-103.
The only safe haven was in bonds, which gained slightly, while commodities were blasted lower once more. Crude oil continued its precipitous decline, losing $3.08, to $103.26. Gold shed another $10.50, shattering the psychologically-important $800 barrier, closing in New York at $792.00 per ounce. Silver slid below $12.00, losing 35 cents, to $11.92.
With seemingly nothing but more bad news heading to Wall Street, there seems to be nothing more than investor resolve to keep markets from an all-out rout. Volume has not returned following the Labor Day recess, igniting fears that many market participants have already left for more guarded environs. The past two days' volume have been mirror images, and have been in the moderate range.
Prices, wages and the value of all assets are all now encountering the beginning of a deflationary spiral which will lead to more misery months ahead.
NYSE Volume 1,639,261,000
NASDAQ Volume 2,614,386,000
Monday, September 8, 2008
Fannie, Freddie Bailout Spurs Big Rally
Stocks rallied on Wall Street Monday after the Bush administration - via the Treasury Dept. - decided to take over troubled mortgage financiers Fannie Mae and Freddie Mac, though informed opinion sees the bailout not as the end of the credit crisis, but rather as just another, potentially more dangerous, chapter in the saga. (note: in the opinion article referenced, this phrase: "That is because these two banks are responsible for $5.3 billion (3.7 billion euros) of America's $12 billion (8.4 billion euro) total mortgage debt. That corresponds to one third of America's gross domestic product." is incorrect. "billions" should be "trillions".)
All assumptions aside, Fannie and Freddie had to be bailed out to avert what would have amounted to a worldwide credit implosion or meltdown of the entire financial system, and that simply could not be allowed to happen. In the end, the takeover by the government amounts to nothing more than thinly-veiled socialism by a government run by people who condemn the very mention of the word.
Surely, the maneuver to salvage what's left of our banking institutions is a noble one, although its likely to be clumsy in execution. If nothing else, the administration can be seen clearly for what it really is: a proxy and shoulder for the failures and overreach of Wall Street greed. These people are hypocrites of the highest order. Sadly, they are the very people entrusted with our nation's highest leadership positions.
Still, the stock market took the news with the same aplomb that a thirsty baby greets the warm nipple of a milk bottle. Markets worldwide rallied on the news.
Dow 11,510.74 +290.43; NASDAQ 2,269.76 +13.88; S&P 500 1,267.79 +25.48; NYSE Composite 8,168.62 +134.86
In other words, to paraphrase a joke told by the Republican VP presidential candidate, Sarah Palin, the lipstick was applied liberally to this pig. This was a highly politically-timed move by Republicans desperate to elect John McCain and salvage an already-Democratically-controlled congress.
While the headline numbers were impressive, the rally was not as broad-based as many may assume. The NASDAQ actually fell into negative territory during the session, and advancers were not dominant over decliners, leading by less than a 2-1 margin, 3913-2334. New lows raced ahead of new highs, 284-134.
Commodities moved in an unimpressive fashion. Oil gained 11 cents to $106.34. Gold lost 30 cents to close in New York at $802.50. Silver lost 26 cents, at $12.07 the ounce, perilously close to a key support and emotional price level.
The bailout of the mortgage market is by no means an end, but rather a necessary step by a desperate, entrenched government about to lose power. If there is any sanity left in this country, Republicans will be shown the door by voters in November.
NYSE Volume 1,768,852,000
NASDAQ Volume 2,600,347,000
All assumptions aside, Fannie and Freddie had to be bailed out to avert what would have amounted to a worldwide credit implosion or meltdown of the entire financial system, and that simply could not be allowed to happen. In the end, the takeover by the government amounts to nothing more than thinly-veiled socialism by a government run by people who condemn the very mention of the word.
Surely, the maneuver to salvage what's left of our banking institutions is a noble one, although its likely to be clumsy in execution. If nothing else, the administration can be seen clearly for what it really is: a proxy and shoulder for the failures and overreach of Wall Street greed. These people are hypocrites of the highest order. Sadly, they are the very people entrusted with our nation's highest leadership positions.
Still, the stock market took the news with the same aplomb that a thirsty baby greets the warm nipple of a milk bottle. Markets worldwide rallied on the news.
Dow 11,510.74 +290.43; NASDAQ 2,269.76 +13.88; S&P 500 1,267.79 +25.48; NYSE Composite 8,168.62 +134.86
In other words, to paraphrase a joke told by the Republican VP presidential candidate, Sarah Palin, the lipstick was applied liberally to this pig. This was a highly politically-timed move by Republicans desperate to elect John McCain and salvage an already-Democratically-controlled congress.
While the headline numbers were impressive, the rally was not as broad-based as many may assume. The NASDAQ actually fell into negative territory during the session, and advancers were not dominant over decliners, leading by less than a 2-1 margin, 3913-2334. New lows raced ahead of new highs, 284-134.
Commodities moved in an unimpressive fashion. Oil gained 11 cents to $106.34. Gold lost 30 cents to close in New York at $802.50. Silver lost 26 cents, at $12.07 the ounce, perilously close to a key support and emotional price level.
The bailout of the mortgage market is by no means an end, but rather a necessary step by a desperate, entrenched government about to lose power. If there is any sanity left in this country, Republicans will be shown the door by voters in November.
NYSE Volume 1,768,852,000
NASDAQ Volume 2,600,347,000
Friday, September 5, 2008
Government Bailout (or, The PPT Rides Again)
Just when the whole world thought everything was going to hell in a handbasket, the manipulative meddlers of the financial underworld changed the tune.
Friday morning at 8:30 am, the Labor Department reported that US Non-farm payrolls shrunk by another 84,000 jobs, and the unemployment rate shot up to 6.1%, a five year high.
The news stories keep using the word "unexpectedly" when referring to the data, as though nobody thought that the economy would lose jobs for the 8th straight month or that the unemployment rate was rising. It's amazing that the mainstream media still considers most of the reading and viewing public stupid.
News flash for the AP, Reuters and the networks. We're not all stupid and some of us refuse to be fooled by innuendo, polls, charts, propaganda and other nefarious methods of fascist propaganda. Go tell it to someone who doesn't know any better. Oh, right, you do... worldwide.
In any case, it was another setback for stocks, or so it would seem as all of the major indices dropped into negative territory as soon as the opening bell sounded at 9:30. By 11:00 am, the Dow, S&P and NASDAQ had all shed more than 1% in value. It was beginning to look like another in the continuing saga of the slumping US stock market.
Of course, what with the incredible rock star status achieved by vice presidential candidate Sarah Palin over the past few days at the RNC, the government gurus simply could not have that, so up went stocks, thanks to our friends at the President's Working Group on Financial Markets (aka, the PPT, Plunge Protection Team) and their proxies in the market: Goldman Sachs, Merrill Lynch, et. al.
By 1:00, all was well. The indices sporting just minor losses or gains, the stage was set to send every pinstriped suit-wearing, fundamentals-are-sound-speaking, broker and dealer on the street home happy as a lark.
By 2:40, all of the indices were into positive ground. The Dow, just before 3:00, was actually up 40 points. All that nonsense about lost jobs, a worsening housing condition and a profit warning from Nokia was put on the back burner. We've got a president to elect, and Wall Street want the McCain/Palin ticket, no doubt about it.
To get those two elected, the markets cannot sell off. They must maintain their positive posture and maybe even spark off a rally or two before November. Happy days... they're here again, folks.
At 3:10 pm: Dow 11,220.96 +32.73; NASDAQ 2,255.88 -3.16; S&P 500 1,242.31 +5.48; NYSE Composite 8,033.76 +25.51
It's rather disheartening and discouraging to those who believe in things like the constitution, rule of law, free market economics and honest elections to see such shenanigans continuing, but we, the American people, have been and will continue to be bought and sold by and for corporate interests, first, last and at every moment in between.
Unless we stand up and demand change.
For the day, losers beat out gainers, 3202-2977. New lows expanded their gap over new highs, to 479-47. That last figure is significant. The new lows have been growing by the day all week, while new highs are at extremmely depressed levels. Despite Friday's somewhat neutral headlline numbers, the internals are indicative of a market poised for further deteroration.
Volume continued at levels just slightly better than last week's anemic performance. The outright lack of trading interest is a collateral outcome of the credit crisis and does not seem to have any opportunity to abate.
Commodities continued to reinforce the defation argument. Oil lost another $1.66, to $106.23. Gold fell 40 cents, to $802.80, while silver lost 62 cents, closing at a multi-month low of $12.33.
NYSE Volume 1,199,665,000
NASDAQ Volume 2,263,084,000
Friday morning at 8:30 am, the Labor Department reported that US Non-farm payrolls shrunk by another 84,000 jobs, and the unemployment rate shot up to 6.1%, a five year high.
The news stories keep using the word "unexpectedly" when referring to the data, as though nobody thought that the economy would lose jobs for the 8th straight month or that the unemployment rate was rising. It's amazing that the mainstream media still considers most of the reading and viewing public stupid.
News flash for the AP, Reuters and the networks. We're not all stupid and some of us refuse to be fooled by innuendo, polls, charts, propaganda and other nefarious methods of fascist propaganda. Go tell it to someone who doesn't know any better. Oh, right, you do... worldwide.
In any case, it was another setback for stocks, or so it would seem as all of the major indices dropped into negative territory as soon as the opening bell sounded at 9:30. By 11:00 am, the Dow, S&P and NASDAQ had all shed more than 1% in value. It was beginning to look like another in the continuing saga of the slumping US stock market.
Of course, what with the incredible rock star status achieved by vice presidential candidate Sarah Palin over the past few days at the RNC, the government gurus simply could not have that, so up went stocks, thanks to our friends at the President's Working Group on Financial Markets (aka, the PPT, Plunge Protection Team) and their proxies in the market: Goldman Sachs, Merrill Lynch, et. al.
By 1:00, all was well. The indices sporting just minor losses or gains, the stage was set to send every pinstriped suit-wearing, fundamentals-are-sound-speaking, broker and dealer on the street home happy as a lark.
By 2:40, all of the indices were into positive ground. The Dow, just before 3:00, was actually up 40 points. All that nonsense about lost jobs, a worsening housing condition and a profit warning from Nokia was put on the back burner. We've got a president to elect, and Wall Street want the McCain/Palin ticket, no doubt about it.
To get those two elected, the markets cannot sell off. They must maintain their positive posture and maybe even spark off a rally or two before November. Happy days... they're here again, folks.
At 3:10 pm: Dow 11,220.96 +32.73; NASDAQ 2,255.88 -3.16; S&P 500 1,242.31 +5.48; NYSE Composite 8,033.76 +25.51
It's rather disheartening and discouraging to those who believe in things like the constitution, rule of law, free market economics and honest elections to see such shenanigans continuing, but we, the American people, have been and will continue to be bought and sold by and for corporate interests, first, last and at every moment in between.
Unless we stand up and demand change.
For the day, losers beat out gainers, 3202-2977. New lows expanded their gap over new highs, to 479-47. That last figure is significant. The new lows have been growing by the day all week, while new highs are at extremmely depressed levels. Despite Friday's somewhat neutral headlline numbers, the internals are indicative of a market poised for further deteroration.
Volume continued at levels just slightly better than last week's anemic performance. The outright lack of trading interest is a collateral outcome of the credit crisis and does not seem to have any opportunity to abate.
Commodities continued to reinforce the defation argument. Oil lost another $1.66, to $106.23. Gold fell 40 cents, to $802.80, while silver lost 62 cents, closing at a multi-month low of $12.33.
NYSE Volume 1,199,665,000
NASDAQ Volume 2,263,084,000
Thursday, September 4, 2008
Major Pain on Wall Street
Stocks took one of their worst losses of the year on Thursday, as more economic news showed the US and world economy slowing to a crawl and new unemployment filings up sharply. Retailers also reported sluggish back-to-school sales at a time when investors are desperate for some cheerful news.
Dow 11,188.23 -344.65; NASDAQ 2,259.04 -74.69; S&P 500 1,236.82 -38.16; NYSE Composite 8,008.25 -261.00
Adding to the already dire circumstances and dour news was a note from PIMCO's Bill Gross, manager of the world's largest bond fund, saying that the government needed to do more to shore up not only financial markets, but mom and pops who are suffering under heavy mortgage debt.
According to Gross,
Gross points out that financial firms have been dumping assets in an effort to maintain liquidity in the absence of a stable lending environment. With credit markets close to a a state of seizure, financing has become almost non-existent in corporate and capital markets.
Interestingly, those same points have been made right here on this blog for many weeks and months. What Gross sees is nothing more than worldwide asset deflation and massive wealth destruction, the same circumstances that held sway during the Great Depression.
Gross' comments are interesting in that he is urging even more government interaction. These kinds of suggestions from a person of his stature suggest that a full-blown economic crisis is at hand. While the government can assist in many ways, others are suggesting a "laissie faire" or "hands off" policy to allow the excesses to be worked off by the markets.
Naturally, neither policy alone is correct. The government, through the Fed and Treasury, is acting as well as one could expect under such extreme pressure. Having a lame duck president and a congress focused on nothing more than the upcoming elections isn't helping matters, and it's unlikely that Americans, investors and financiers will see any relief from falling asset prices any time soon.
It will be January before a new president and congress is sworn in and another 60 days - at the very least - before any meaningful legislative action would take place. Expectations for a very slow 4th quarter and 1st quarter of 2009 cannot be underestimated. It will be something of a miracle if stocks don't decline another 10 to 20% by then.
Whichever candidate succeeds in taking over the White House - be it Obama or McCain - he will inherit the worst set of economic circumstances since FDR. Burgeoning federal debt (nearing $10 Trillion), extreme deficits, continuing job losses and an economy limping toward collapse await the winner. Godspeed to whomever it may be.
On the day, declining stocks overwhelmed advancers, 5108-1144, nearly a 5-1 ratio. New lows dominated new highs, 401-54. What's amazing is that any stocks reached new 52-week highs.
Volume, though better than the past two weeks, is still on the light side. Investors and large funds are holding back as best they can, seeking to avoid an all-out panic, though today's activity bordered on a crash with losses on the major indices right at 3%.
Deflating commodity prices continued without pause. Oil dropped another $1.46, to $107.89. Gold fell $5.00, to $803.20. Silver slipped a penny to $12.94. Further slippage in the metals may produce a rout, as much of the buying in gold and silver was speculative and near the top. With most of those gains already wiped out, investors in losing positions may soon capitulate if some stability is not brought to bear. Without any support apparent, gold could easily fall to $600 and silver under $10. At those points, speculators may become much more interested, though by no means would those levels constitute bottoms.
Speaking of bottoms, the Dow is now within 200 points of the July lows. The NASDAQ is also less than 100 points from its March 10 low of 2169.34, while the S&P 500 is dangerously close to its most recent bottom of 1214.91 at the close on July 15.
Since no bottom has yet to be put in place, expect these levels to fail, and soon. Tomorrow's Non-farm employment report is likely to show another 60-80,000 jobs lost in the month of August, triggering more selling. Today's action may be seen as prologue to the 8:30 am release of the employment data.
NYSE Volume 1,301,593,000
NASDAQ Volume 2,360,495,000
Dow 11,188.23 -344.65; NASDAQ 2,259.04 -74.69; S&P 500 1,236.82 -38.16; NYSE Composite 8,008.25 -261.00
Adding to the already dire circumstances and dour news was a note from PIMCO's Bill Gross, manager of the world's largest bond fund, saying that the government needed to do more to shore up not only financial markets, but mom and pops who are suffering under heavy mortgage debt.
According to Gross,
"Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning."
Gross points out that financial firms have been dumping assets in an effort to maintain liquidity in the absence of a stable lending environment. With credit markets close to a a state of seizure, financing has become almost non-existent in corporate and capital markets.
Interestingly, those same points have been made right here on this blog for many weeks and months. What Gross sees is nothing more than worldwide asset deflation and massive wealth destruction, the same circumstances that held sway during the Great Depression.
Gross' comments are interesting in that he is urging even more government interaction. These kinds of suggestions from a person of his stature suggest that a full-blown economic crisis is at hand. While the government can assist in many ways, others are suggesting a "laissie faire" or "hands off" policy to allow the excesses to be worked off by the markets.
Naturally, neither policy alone is correct. The government, through the Fed and Treasury, is acting as well as one could expect under such extreme pressure. Having a lame duck president and a congress focused on nothing more than the upcoming elections isn't helping matters, and it's unlikely that Americans, investors and financiers will see any relief from falling asset prices any time soon.
It will be January before a new president and congress is sworn in and another 60 days - at the very least - before any meaningful legislative action would take place. Expectations for a very slow 4th quarter and 1st quarter of 2009 cannot be underestimated. It will be something of a miracle if stocks don't decline another 10 to 20% by then.
Whichever candidate succeeds in taking over the White House - be it Obama or McCain - he will inherit the worst set of economic circumstances since FDR. Burgeoning federal debt (nearing $10 Trillion), extreme deficits, continuing job losses and an economy limping toward collapse await the winner. Godspeed to whomever it may be.
On the day, declining stocks overwhelmed advancers, 5108-1144, nearly a 5-1 ratio. New lows dominated new highs, 401-54. What's amazing is that any stocks reached new 52-week highs.
Volume, though better than the past two weeks, is still on the light side. Investors and large funds are holding back as best they can, seeking to avoid an all-out panic, though today's activity bordered on a crash with losses on the major indices right at 3%.
Deflating commodity prices continued without pause. Oil dropped another $1.46, to $107.89. Gold fell $5.00, to $803.20. Silver slipped a penny to $12.94. Further slippage in the metals may produce a rout, as much of the buying in gold and silver was speculative and near the top. With most of those gains already wiped out, investors in losing positions may soon capitulate if some stability is not brought to bear. Without any support apparent, gold could easily fall to $600 and silver under $10. At those points, speculators may become much more interested, though by no means would those levels constitute bottoms.
Speaking of bottoms, the Dow is now within 200 points of the July lows. The NASDAQ is also less than 100 points from its March 10 low of 2169.34, while the S&P 500 is dangerously close to its most recent bottom of 1214.91 at the close on July 15.
Since no bottom has yet to be put in place, expect these levels to fail, and soon. Tomorrow's Non-farm employment report is likely to show another 60-80,000 jobs lost in the month of August, triggering more selling. Today's action may be seen as prologue to the 8:30 am release of the employment data.
NYSE Volume 1,301,593,000
NASDAQ Volume 2,360,495,000
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