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Market Recap: Financials Shoot Each Other In The Foot, Stocks Fall


Financials downgraded financials, which caused a stir. But Retailers were up due to a nice showing on Black Friday. Stocks still fall.

Stocks dropped, breaking the streak of Turnaround Tuesday. The Dow Industrials fell -65 points, or -0.49% to 13,248, the S&P 500 fell -9.6 points, or -0.65% to 1462, and the Nasdaq Composite fell -17 points, or -0.66% to 2619.

Financial stocks shot each other in the foot this morning. The major investment banks tumbled after JPMorgan (JPM) analysts said the banks would face more losses due to more write-downs, falling M&A activity, and overall weaker credit conditions. The report coincided with one by Goldman Sachs (GS) that the firm cut its earnings expectations for S&P 500 companies to reflect profit impairments in the banking industry. Growth was reduced to 0.7% from a previous figure of 4.0% with 2008 estimates cut to 5.6% growth vs. 7.5% previously. GS fell -5.14%, Morgan Stanley (MS) fell -4.34%, Bear Stearns (BSC) fell -4.87%, and Merrill Lynch (MER) fell -3.27%. See a related story by Professor Shedlock, Deflationary Credit Downturn Is Underway.

Meanwhile, retailers were the surprising bright spot. Research firm Jefferies issued a note this morning stating a number of retailers would likely surprise the Street with better-than-expected comparable store sales due to a strong Black Friday and Thanksgiving Day weekend in addition to the recent cooler weather. Gap (GPS) added +1.32%, Abercrombie & Fitch (ANF) added +0.64%, Wal-Mart (WMT) finished +0.67%, and Costco (COST) closed +3.27%.

Elsewhere, tech stocks were mixed. Baidu (BIDU) added +0.81%, Google (GOOG) gained +0.27%, and Apple (AAPL) added +0.54%. Toddo mentioned these stocks, asking whether the action showed "year-end performance anxiety." For more, read his Random Thoughts.

In commodities, crude oil continued its decline falling -0.99 to 88.32. Professor Michael cautioned Buzz readers in pressing the short side of crude even though it broke key support of $90 due to, amongst other reasons, relatively stable performances in the XLE and OIH. Those stocks closed -1.5% and -1.0% respectively.

Copper also fell -5.8 points to 302.00 per pound, but precious metals gained on the day. Silver gained +0.25 to 14.47, and Gold added 12.90 to 807.60. Read Professor Lance Lewis' Minyan Mailbag for his update on gold's recent performance.

For more summaries, click on Minyanville's Buzz Bits.

Earnings Review:

Chico's FAS (CHS) reports $0.10 EPS vs. $0.11 cons on revs $416.00 mln vs. $421.26 mln cons.

Collective Brands (PSS) reports $0.39 EPS vs. $0.32 cons on revs $830.7 mln vs. $848.22 mln cons.

Guess (GES) reports $0.62 EPS vs. $0.58 cons on revs $469.10 mln vs. $424.54 mln cons.

Idea Flow

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: CROX, PHM, FLIR, CY, MBT, ISRG, WDC, CSIQ, ESLR, NBIX, DIS, ATVI, XLE, OIH, IWM, QQQQ, C, MA, CME, MOGN, GOOG, FRPT

Some bearish trade or investment ideas: DAL, GM, INFN, CSCO

Hope y'all had a great day. See you in the mornin'!
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No positions in stocks mentioned.

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