The world financial system met with extreme turmoil Monday morning as Lehman Bros., one of Wall Street's best-established investment banks, began the day by filing for bankruptcy protection in federal court.
The latest victim of the ongoing liquidity crisis, Lehman failed to find a buyer of last resort to rescue its failing franchise. Shares fell to 21 cents at the close of the session. Lehman had traded as high as 60 in January of 2008.
Fast of the heels of that dour note, news that Bank of America (BAC) was in talks to buy out Merrill Lynch (MER) for $50 billion (a mammoth premium) and troubled insurer AIG (AIG) was seeking $20-40 billion in loans from the Federal Reserve, hit the street rapid fire. (Later in the day, NY Governor Patterson approved a deal which would allow the company to borrow funds from its subsidiaries, allowing more time to negotiate with the Fed or negotiate the sale of additional assets.)
Markets opened to the negative and soon encountered steep losses. By 10:00 am, the Dow was off by more than 300 points. By the end of the day, the blue chips had turned in one of their worst-performing sessions in recent memory.
Dow 10,917.51 -504.48; NASDAQ 2,179.91 -81.36; S&P 500 1,192.69 -59.01; NYSE Composite 7,681.25 -410.59
Indices in Asia were spared the downdraft, as the news came off the wires as those markets were closing or already closed. In Europe, however, the carnage was widespread, as markets from Great Britain to Spain to Germany all suffered losses of between 2 and 5%.
In US markets, the internals confirmed that the selling was broad-based, though led by financial stocks. Overall, declining issues commanded a nearly 10:1 advantage over winners, 5803-615. New lows dominated new highs by an even greater ratio, approaching 20:1, at 1062-55.
Rather than call the washout session a bottom, analysts were more or less holding their breath along with their tongues, in anticipation of even worse news that seems to follow every few days.
The NASDAQ fared best of the major indices. While falling more than 80 points it still finished above the March 10 low of 2169.34. The Dow, however, fell below the July 15 closing low of 10,962.54. The S&P 500 was in near-panic mode, crashing through its July 15 low of 1214.91.
The last time the S&P closed this low was on October 27, 2005, when it ended the session at 1178.90. Today's close on the Dow was its lowest since February 13, 2006 (10,892.32).
What's concerning to many is the new policy stance of the Federal Reserve, which chose not to fix a buyer to Lehman, like it did in its rescue of Bear Stearns. While the Fed and Treasury are strong proponents of the Merrill-Bank of America marriage, they allowed Lehman to fail and also don't seem committed to helping AIG with loan guarantees or any other action. AIG's condition is different, however, in that it is not in a liquidity squeeze caused by malinvestments, but in a position to be downgraded by ratings agencies, making it more difficult for the firm to raise cash.
Still, the Fed's inaction on Lehman clearly displays a shift in policy, to a more hands-off stance, placing individual companies in a more precarious position while the Fed seeks to find more systemic remedies.
In the commodities area, oil and energy futures took a beating, led by crude oil, which saw futures for November delivery fall to $95.69, off $5.56. Gold rebounded $22.50, to $787.00. Silver gained 34 cents to $11.14.
Trading volume on the major indices was brisk.
NYSE Volume 1,876,814,000
NASDAQ Volume 2,727,545,000
Monday, September 15, 2008
Friday, September 12, 2008
A Day Better Taken Off
Stocks vacillated around the flat line on most major indices on Friday, as investors, apparently worn out from the volatile sessions earlier in the week, settled down, sat back and waited for Hurricane Ike.
Moving presidential politics to a back seat, the category 3 hurricane is headed to the heart of the Houston refinery complex, where most oil form the Gulf is turned into gasoline or other fuels.
Owing to the storm's presence, as the winds gained in intensity off Galveston, gas prices went up as oil prices went down.
In other economic news, retail sales fell in August, but the real news was the 0.9% decline in wholesale prices for the month, yet another indication of drying up demand and a global slowdown.
Also troubling was the Treasury Department's reluctance to bail out ailing Lehman Brothers (LEH, 3.78, -0.44). The formerly-high-flying investment bank is on its last legs and still searching for a rescue.
Dow 11,421.99 -11.72; NASDAQ 2,261.27 +3.05; S&P 500 1,251.69 +2.64; NYSE Composite 8,091.84 +80.59
In very thin trading, advancing issues edged decliners, 3302-2965. New lows continued to dominate new highs, 365-61.
Commodities reversed fortunes, for a day, at least, though the overall trend is still down. Oil ended higher by 32 cents, closing at $101.25 on the NY Mercantile Exchange. Gold gained $19, to $764.50. Silver rebounded 24 cents to $10.80.
It was a day better spent pondering the meaning of life or sipping mai tais by the pool. Life on Wall Street will get back to its normal dizzying pace on Monday. Well, maybe. The Fed meets on Tuesday, so it's likely nothing much may occur until then, when, in all likelihood, the FOMC will do... nothing.
NYSE Volume 1,250,822,000
NASDAQ Volume 1,989,322,000
Moving presidential politics to a back seat, the category 3 hurricane is headed to the heart of the Houston refinery complex, where most oil form the Gulf is turned into gasoline or other fuels.
Owing to the storm's presence, as the winds gained in intensity off Galveston, gas prices went up as oil prices went down.
In other economic news, retail sales fell in August, but the real news was the 0.9% decline in wholesale prices for the month, yet another indication of drying up demand and a global slowdown.
Also troubling was the Treasury Department's reluctance to bail out ailing Lehman Brothers (LEH, 3.78, -0.44). The formerly-high-flying investment bank is on its last legs and still searching for a rescue.
Dow 11,421.99 -11.72; NASDAQ 2,261.27 +3.05; S&P 500 1,251.69 +2.64; NYSE Composite 8,091.84 +80.59
In very thin trading, advancing issues edged decliners, 3302-2965. New lows continued to dominate new highs, 365-61.
Commodities reversed fortunes, for a day, at least, though the overall trend is still down. Oil ended higher by 32 cents, closing at $101.25 on the NY Mercantile Exchange. Gold gained $19, to $764.50. Silver rebounded 24 cents to $10.80.
It was a day better spent pondering the meaning of life or sipping mai tais by the pool. Life on Wall Street will get back to its normal dizzying pace on Monday. Well, maybe. The Fed meets on Tuesday, so it's likely nothing much may occur until then, when, in all likelihood, the FOMC will do... nothing.
NYSE Volume 1,250,822,000
NASDAQ Volume 1,989,322,000
Thursday, September 11, 2008
Oil, Gold Lead Way Lower
Forget the stock market for a moment and take a look at commodities. Focusing on the major precious metals, gold and silver, and America's favorite, crude oil, we can almost see the demand curve turning negative by the minute.
Commodity prices worldwide are collapsing with the precious metals leading the charge lower. There are no support levels or pivot points in the recent decline of both gold and silver. From their highs, gold is down 26%, silver, 47%, oil, 32%
Today's closing figures in New York were yet another indication of the commodity rout. Oil finished at $100.87, down $1.71. Gold slipped to $745.50, off $17.00. Silver melted down to $10.56, lower by 34 cents per ounce. Declining value in physical assets such as gold and silver is not an encouraging sign for any investor seeking growth opportunity.
Stocks on the day made all or most of their gains all in the final half hour. Markets were markedly low in the first half hour of trading. The Dow was down 170 points by 9:45 am. The rest of the session was spent short-covering and no doubt pumping by the inner circle of government interlocutors and their agents provacateurs in the market.
Dow 11,433.71 +164.79; NASDAQ 2,258.22 +29.52; S&P 500 1,249.05 +17.01; NYSE Composite 8,011.25 +3.99
As evidence of the manipulative nature of the day's trading, there were more decliners than advancers, 3459-2840. The gap between new lows and highs expanded magnificently, to 731 new lows to a pittance of new highs, 57. One should not be fooled by today's gains. This is a very weak market under incredible stress. There were underhanded interests at work on the 7th anniversary of the World Trade Center catastrophe to ensure that stocks traded higher.
Volume was light, with about 600 million fewer shares traded today than yesterday.
NYSE Volume 1,375,594,000
NASDAQ Volume 2,298,872,000
Commodity prices worldwide are collapsing with the precious metals leading the charge lower. There are no support levels or pivot points in the recent decline of both gold and silver. From their highs, gold is down 26%, silver, 47%, oil, 32%
Today's closing figures in New York were yet another indication of the commodity rout. Oil finished at $100.87, down $1.71. Gold slipped to $745.50, off $17.00. Silver melted down to $10.56, lower by 34 cents per ounce. Declining value in physical assets such as gold and silver is not an encouraging sign for any investor seeking growth opportunity.
Stocks on the day made all or most of their gains all in the final half hour. Markets were markedly low in the first half hour of trading. The Dow was down 170 points by 9:45 am. The rest of the session was spent short-covering and no doubt pumping by the inner circle of government interlocutors and their agents provacateurs in the market.
Dow 11,433.71 +164.79; NASDAQ 2,258.22 +29.52; S&P 500 1,249.05 +17.01; NYSE Composite 8,011.25 +3.99
As evidence of the manipulative nature of the day's trading, there were more decliners than advancers, 3459-2840. The gap between new lows and highs expanded magnificently, to 731 new lows to a pittance of new highs, 57. One should not be fooled by today's gains. This is a very weak market under incredible stress. There were underhanded interests at work on the 7th anniversary of the World Trade Center catastrophe to ensure that stocks traded higher.
Volume was light, with about 600 million fewer shares traded today than yesterday.
NYSE Volume 1,375,594,000
NASDAQ Volume 2,298,872,000
Wednesday, September 10, 2008
Stocks Settle for Small Change; Metals Rocked
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
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
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
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