Market Recap: Financials, Economic Data Lead Stocks Lower
Housing writedown concerns stall rally.
Bulls failed to get over the hump as banking woes and sour economic data weighed on stocks. The Dow Industrials closed -109 points, or -0.88% to 12,422, the S&P 500 fell -11.8 points, or -0.88% to 1341, and the Nasdaq Composite dropped -16.7 points, or -0.71% to 2,324.
Financial stocks started on a weak note after Oppenheimer analyst Meredith Whitney said Citigroup (C) would suffer losses four times greater than what she had previously forecasted. According to Bloomberg, Whitney, who was the first to predict that Citigroup would cut its dividend to preserve capital, said the company may write down $13.1 billion in losses tied to leveraged loans and collateralized debt obligations. Further, she noted that it wouldn't be her last reduction and anticipated further downside to estimates and stocks.
The news took a toll on the banking sector. Lehman Brothers (LEH) fell -6% to $42.49. Wachovia (WB) fell -6.7% to $28.02, and Morgan Stanley (MS) fell -3.3% to $47.79. For context, read Toddo's Random Thoughts.
In housing, home builders declined after the Commerce Department said sales of new homes fell 1.8% in February. The figure brought new home sales to its lowest level in 13 years but was basically inline with expectations. The homebuilders ETF (XHB) dropped almost -6% to $21.55. Individual stocks included Beazer Homes (BZH) falling -13.7% to $8.75. Standard Pacific (SPF) fell -9% to $4.78, and Meritage Homes (MTH) lost -9.8% to $18.82.
Elsewhere, Deere (DE) fell -1.7% to $80.82, and Terex (TEX) fell -1.4% after the durable goods report came in less than expected. Orders for big ticket items fell -1.7% in February vs. estimates of +0.7%. Less transportation, the figure fell -2.6% vs. -0.3% cons. Other decliners included UPS (UPS) -0.83% to $72.73, and Burlington Northern (BNI) -1.3% to $94.10. For more, read Professor Kevin Depew's Five Things You Need To Know.
Commodities were strong. Crude oil surged +4.78 to 106.13. Gold added +15.20 to 950.20. Silver finished +0.578 to 18.340, and copper gained +7.05 to 377.00.
Read Professor Sally Limantour's Commodity Bull Market Alive And Well.
The dollar index declined -0.829 to 71.447.
For more Buzz insight, check out 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, GOOG, CF, MOS, IBM, SPX, JBL, beta
Some bearish trade or investment ideas: MOT, S, AEM, FMCN, HOC, GVA, NCC
See you on the flipside. Have a good night.
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