Market Recap: More of the Bear Scare
Bad Bear chatter ruined the day for the bulls; stocks fell for a third day.
Stocks tumbled a third consecutive day. The Dow Industrials finished -153 points, or 1.29% to 11,740, the S&P 500 closed -20 points, or 1.55% to 1,273, and the Nasdaq Composite dropped -43 points, or 1.95% to 2,169.
Major indexes fell to their lowest levels since January due in part to jitters in the financial markets. Chatter of solvency issues and downgrades on the bonds held by Bear Stearns (BSC) helped the stock plunge nearly 14% to the lowest levels in over five years.
"Volatility is going bonkers," Professor Adam Warner noted on the Buzz. "March options are up about 10 points. April's are up 5. Volatility across the board is at 52 week highs."
But even though the company attempted to quell the market rumors, the stock never fully recovered. BSC closed -11% to $62.30 dragging down other stocks in the financial sector as well. Other decliners included Lehman Brothers (LEH) dropping -7.3% to $42.98; Merrill Lynch (MER) fell -5.2% to $42.894. and Bank of America (BAC) closed -4% to $35.31. For more, read Professor Bennet Sedacca's Changing the Benchmark.
Elsewhere, the GSEs made headlines over the weekend. Both Fannie Mae (FNM) and Freddie Mac (FRE) appeared in this weekend's edition of Barron's with speculation that the companies would be bailed out by the government. Yet shares still plunged hitting new 52 week lows. FRE fell -11.5% to $17.39, and FNM dropped -13% to $19.81. For more, read Professor Depew's Five Things You Need To Know.
In the tech sector most stocks fell with notable decliners including Apple (AAPL) dropping -2.5% to $119. Research in Motion (RIMM) closed -5% to $93.00, and Google (GOOG) dropped nearly 5% to $412.07. Noteworthy gainers were Microsoft (MSFT) +0.47% to $27.99; Oracle (ORCL) +1.05% to $19.28; and IBM (IBM) +0.06% to $114.01. Check out Todd's Random Thoughts.
Commodities started off the morning weaker but gradually gained strength throughout the day. Crude oil reached an intraday record $108.21 per barrel before settling +2.81 to 107.96. Gold recovered off its lows but still settled -0.90 to 973.30. Silver fell -0.558 to 19.60, and copper lost -10.35 t4o 382.85.
The dollar index fell -0.049 to 72.978.
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: GOOG, MS, AMAT, INTC, SGP, MCD, USO, Crude, Pharma
Some bearish trade or investment ideas: GS, BSC, FCX, MON, KERX, BMRN, BX, SDS (Ultrashort), GOOG
Will tomorrow be Turnaround Tuesday? Tune in to find out! See you Next time!
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