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Market Recap: Markets Finish Week on Sour Note


AIG jitters started an ugly Friday; Dow falls over 300 points.

Stocks fell a second consecutive day. The Dow Industrials fell -315 points, or -2.5% to 12,266, the S&P 500 dropped -37 points, or -2.71% to 1,330, and the Nasdaq Composite lost -60 points, or -2.5% to 2,271.

The equity market opened very weak this morning after digesting the earnings report of American International Group (AIG). The world's largest insurer reported losses of $11.1 billion on credit default swaps backing subprime CDOs which contributed to a $5.3 billion loss in the fourth quarter, the largest in the firm's 90-year history. Further in its conference call the company noted that it expects to see more losses in 2008 and property values falling another 7-8%. For more read Minyan Editor Andrew Jeffery's column AIG's Evaporating Balance Sheet.

The news put obvious pressure on the financial sector heightening concerns of credit market turmoil. Adding to the worries were UBS stating financial firms were likely to face $600 bln from the credit crisis and Deutsche Bank cutting the estimates of Morgan Stanley (MS) and Bear Stearns (BSC). Those stocks fell -5.14% to $42.12 and -5.18% to $79.86 respectively. Other stocks included JP Morgan (JPM) dropping -4.2% to $40.65, Wachovia (WB) closing -5.3% to $30.62, and Goldman Sachs (GS) fell -4.0% to 169.63. Check out today's Random Thoughts.

Although figures came in greater than expected, economic data failed to provide a catalyst. The Commerce Department reported consumer spending rose 0.4% in January vs. expectations of 0.2%. Personal Income increased 0.35 vs. 0.2% consensus. Also the inflation data was inline with core PCE figures coming in at 0.3% on a month-over-month basis. For more read Professor Kevin Depew's Five Things You Need To Know.

In other parts, the tech sector took a beating. Notable losers included the high beta stocks: Apple (AAPL) falling -3.6% to $125.15. Research In Motion (RIMM) fell -4.46% to $104.00. Garmin (GRMN) lost -3.10% to $58.52.

In commodities, crude oil fell -0.85 to 101.74. Gold added +8.80 to 976.30. Silver gained +0.178 to 19.808, and copper fell -1.15 to 385.20.

The dollar index gained +0.008 to 73.729.

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

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: BIDU, AKAM, GOOG, LLNW, OVTI, CHNR, GILD, DELL, CSCO, AAPL

Some bearish trade or investment ideas: LEH, MER, GLD, HRS, CLF, CF, AEM, GOLD, LNN, ITRI, CRM, FDRY, IM, MVSN, VNO, BSC, GS, JPM

Have an awesome weekend, Minyans. See you bright and early, Monday!
No positions in stocks mentioned.

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