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Market Recap: Another Day Of Volatility; Stocks Fall


Markets had more volatility as we head closer to expiration. Stocks fall on credit worries.


Stocks dropped in another volatile session. The Dow Industrials fell -120 points, or -0.9% to 13,110, the S&P 500 fell -19 points, or -1.32% to 1,451, and the Nasdaq Composite fell -25 points, or -0.98% to 2618.

Hints of more trouble ahead continued to weigh in on the homebuilding and financial sectors. Shares of Wells Fargo (WFC) fell after the nation's second largest mortgage lender said that home-equity losses will remain elevated through 2008. Professor Depew highlighted on the Buzz comments from the CEO that there were larger implications for the markets in general. Although the company had minimal exposure to CDOs and asset backed commercial paper, Prof. Depew noted the company was not immune to overall credit deterioration even though the company actually followed the "reasonable path toward risk aversion." "This, in a nutshell," he said, "is why credit problems are so difficult to "contain."

Wells Fargo closed the day down -3.85%. The Philadelphia Banking Index (BKX) fell -3.56%. Morgan Stanley (MS) led the investment banks to the downside losing -4.21%, Bear Stearns (BSC) lost -3.2%, and Lehman Brothers (LEH) fell -3.79%. Homebuilders suffered also with the Philadelphia Housing Sector Index (HGX) closing -1.92%, Lennar (LEN) fell -4.1%, Ryland (RYL) lost -2.1%, and Meritage (MTH) closed -2.08%. For another aspect of the credit crisis, read Professor Linden's Could This Credit Crunch Have Been Avoided? Also read Professor Depew's Five Things You Need To Know.

In the retail space, stocks were also treated poorly by the markets. Sears Holding (SHLD) hit new lows falling -2.19%. Professor Macke criticized the company noting the limits of the 'ride along with the genius' trade with CEO Eddie Lampert at the helm. Further, Professor Macke stated, "Plus, it no longer reports monthly same-store sales. That's always a warning sign."

In economic data, inflation data was released with CPI on a monthly and annual basis coming in as expected. CPI figures for the month came in at 0.3% in-line with expectations, and figures on an annualized basis rose by +3.5% also in-line with expectations. Weekly initial claims stood at 339,000.

The NY Empire State Index jumped to 27.4, holding near a three-year high suggesting manufacturing is still strong in the Northeast region, and the Philadelphia Fed was also released rising to 8.2 from 6.8 in October as new orders and shipments increased. (From Bloomberg) Read Professor Depew's Minyan Mailbag for a related look on energy prices.

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

Earnings Review

  • Intuit (INTU): -$0.12 EPS; $437 mln revenues.
  • Kohl's (KSS): $0.60 EPS; $3.95 bln revenues.
  • Salesforce (CRM): $0.11 EPS; $190.5 mln revenues.
  • Starbucks (SBUX): $0.21 EPS; $2.42 bln revenues.

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: ESLR, STP, MCD, NMX

Some bearish trade or investment ideas: FCX, MAN, AMAT, SHLD, SBUX, JCP

Tomorrow's Friday, Minyans! Woo hoo! Have a great night!

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No positions in stocks mentioned.

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