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Minyanville's Market Recap: Dollar Plunge, GM Shock, Financial Woes, Markets Succumb

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The markets could not withstand a lethal cocktail from GM and the Financials. Dow falls 360 points.

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The markets suffered a broad-based sell-off today. The Dow Industrials fell –360 points, or –2.64% to 13300, the S&P 500 fell –44 points, or –2.94% to 1475, and the Nasdaq Composite fell –76 points, or –2.70% to 2748.

The financials led the way to the downside again today. The FT reported the likelihood of a sale of forced assets was increasing after downgrades by the major ratings agencies pushed the debt vehicles into default. Standard & Poor's and Moody's was reported to have received default notices of $5 bln worth of collateralized debt obligations (CDOs) in recent weeks, giving investors with senior tranches the right to sell assets. For more on another ratings agency, read Professor Shedlock's article Any Credibility Left At Fitch?

Furthermore, the $80 bln Superfund, proposed by the major investment banks and backed by Treasury Secretary Hank Paulson, was reported to be suffering complications due to the recent turmoil with Citigroup (C). Citi shares continued to slide, down –4.7% to $33.41 closing slightly above a new 52-wk low. Professor Macke noted on the Buzz at one point shares of Citigroup were down –18% since first hitting a 52-wk low 5 days ago. Other financials followed. Lehman Brothers (LEH) fell –5.7%, Bear Stearns (BSC) fell –5.3%, and Goldman Sachs (GS) fell –4.0%. Read Toddo's Random Thoughts for more on the financials.

Also compounding the pressure was news of General Motors (GM) posting a record $39 bln quarterly loss on deferred tax charge signaling the company was unlikely to generate enough income to use such benefits. Dr J was baffled, noting on the Buzz that the loss was valued at $2.80 per share versus expectations of $0.25! GM fell –6.11%. Professor Macke noted the sentiment affected related plays: Avis Budget Group (CAR) –19.06%, Hertz (HTZ) –7.53%, and Dollar Thrifty Automotive (DTG) -14.94%.

In currencies, the dollar plunged to new lows after Chinese officials hinted of plans to diversify the country's $1.4 trln of foreign exchange reserves. Officials of China's National People's Congress stated the dollar is losing its status as the world currency and that China will readjust accordingly. Read Professor Depew's Five Things You Need To Know and Toddo's Fire on the Mountain.

In commodities crude oil fell –0.33 to 96.37 after the weekly petroleum report showed levels declined less than expected. The figure sparked a slight sell-off in the rest of the commodities space with silver losing –0.055 to $15.325, and copper futures losing –8.25 to 325.90. Gold held steady closing up +10.10 to 833.50.

In other economic data, Productivity rose to 4.9% versus 3.1% consensus. Consumer credit was also released coming in at $3.7 bln versus $9.0 bln consensus.

For more summaries, please click on Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.

Earnings Review

Cisco (CSCO) reported 1Q $0.40 EPS versus $0.36 consensus on revenues $9.55 bln versus $9.53 consensus.

McDermott (MDR) reports 3Q $0.61 EPS versus $0.54 consensus on revenues $1.32 bln versus $1.4 bln consensus.

Eagle Bulk Shipping (EGLE) reports 3Q $0.37 EPS versus $0.35 consensus on revenues $33.9 mln versus $34.5 consensus.

First Solar (FSLR) reports $0.49 EPS versus $0.20 consensus on revenues $159 mln versus $120 mln consensus.


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: LULU, CYBS, LDK, NEM, OPXT, RVBD, JBL, FITB, FHN, SNV, DTV

Some bearish trade or investment ideas: SPX, GE, DRYS, EXM, WYNN, LVS, WM, AMG, VMW, CAR, HTZ, DTG, C, NILE, APKT

Have a great night, Minyans! We'll see you bright and early tomorrow morning!

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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