Market Recap: Stocks Sag on Credit Fears, Record Oil
Equities fell on myriad of concerns. Commodities spiked higher.
A host of issues weighed on equities, but compared to recent volatility, today's session was rather tame. The S&P 500 finished down 10.30 or 0.75% to 1,355. As it did yesterday, the Nasdaq Composite led the way to the downside, ending the session down 26.64 or 1.13% at 2,322, while the Dow Jones Industrial Average fell 49.18 or 0.39% to 12,527.
Financial stocks were under pressure all day on news Citigroup (C) would be selling $12 billion of leveraged buyout loans at 90 cents on the dollar. Initially investors cheered the news, but on the Buzz and Banter today, Mr. Practical noted that Citi agreed to indemnify the buyers for the first 20% of losses.
Bloomberg also ran a story noting that Goldman Sachs (GS) has more Level III assets on its books than its market capitalization. Toddo has been on this story since last fall. Losses were seen across the board, with Goldman moving lower by 2.79% to $173.90, Lehman Brothers (LEH) off almost 8% to $40.40 and Morgan Stanley (MS) down 2.64% to $46.10. Selling recommenced on the bond insurers, as Ambac Financial (ABK) finished lower by 6.3% to $5.65 and MBIA (MBI) dropped 7.85% to $11.97.
Crude oil spiked today on a bullish inventory report, hitting an all-time high intraday of $112.21. Professor Krueger noted some interesting action in a reverse oil ETF, cautioning investors on what seems like an easy way to bet on crude. Oil names like Transocean Inc (RIG), Noble Corp (NE) and Diamond Offshore (DO) all rose with the price of the costly crude.
Boeing (BA) helped keep the Dow from losing more ground, as news of further delays on its much-awaited 787 Dreamliner pushed shares up 4.77% to $78.60. On the Buzz, Professor Bloudek -- a former Boeing engineer -- noted the company finally seems to be creating a realistic plan for rolling out the big jet. He did, however, caution the future may not be entirely bright for the Seattle-based aerospace giant.
Homebuilders continued their downward spiral, unable to maintain the momentum of recent weeks. Despite tax relief which boggles the mind of Professor Zucchi, the sector continues to bleed cash. The outlook is grim, but the easy trade is certainly over in this group. Beazer Home (BZH) lost another 9.10% to $9.29, Hovnanian (HOV) fell 8.36% to $10.96 and Lennar (LEN) dropped 7.10% to $18.58.
A profit warning from UPS (UPS) renewed fears of economic weakness, and the stock sold off 3.74% to $70.58. Rival Fedex (FDX) fell in sympathy, down 3.06% to $93.11.
On the political front, President Bush unveiled a new plan this morning to provide additional assistance to struggling homeowners. The plan encourages banks to write off bad debt and makes delinquent borrowers for FHASecure loans, guaranteed by the Federal Housing Administration. The Wall Street Journal also reported that the Federal Reserve is weighing options to increase its lending capabilities to further ease the credit crunch.
In commodities, crude oil rose 2.12% to 110.87. Gold jumped 2.12% to 934.65 and Silver closed up 3.00% to 18.20.
The dollar index fell 0.57% to 72.12.
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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: AKAM, ELX, QLGC, GOOG, CIEN, IWM, GEF, MA, MRB, NGD, FTI, AAPL, SPY, QQQQ, XLF
Some bearish trade or investment ideas: C, BIDU, LEH, GS
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