Minyanville's Market Recap: Bernanke Paulson Combo Hits The Market
The markets couldn't withstand the double blow from Bernanke and Paulson. Stocks finish lower.
Comments from Fed Chairman Ben Bernanke made last night to a New York audience added to economic concerns. Chairman Bernanke stated last night at a New York dinner that the current housing slump would likely deteriorate further and be a "significant drag" on the economy through 2008. Although conditions in the financial markets improved from the worst of this summer's turmoil, Bernanke said a full recovery would likely take time as "it remains too early to assess the extent" of the economic damage by the weakness in housing and credit turmoil. "We may well see some setbacks," he added. The comments took their tolls on housing and the financial sector. The BKX fell -2.1% to 103.98. Toddo noted in his Random Thoughts the importance of the 105.50 level. Other stocks were hit hard.JP Morgan (JPM) lost -2.5%, Lehman Brothers (LEH) lost -2.6%, and Goldman Sachs (GS) lost -1.97%. For more on Bernanke, read Professor Depew's Five Things You Need To Know.
In housing, the HGX fell to 158.32 down -2.98%. Ryland (RYL) slipped below the $24 level losing -4.08. Toll Brothers (TOL) lost -3.4%, and Meritage Homes (MTH) was hit the hardest losing almost -6%. For an updated view on housing, read Professor Zucchi's More Gore In Housing Land.
Later in the day, Treasury Secretary Hank Paulson appeared on the tape restating his concerns on the housing market and that the Bush administration would evaluate accounting rules for off-balance sheet vehicles. Paulson said that the housing decline represented the greatest current risk to the U.S. economy and reiterated his concerns for transparency by stating "we need to ensure yesterday's excesses are not repeated tomorrow." Read Toddo's Eye on the Close: Boo Takes A Bow for his thoughts on Paulson's comments.
In a look at commodities, crude oil continued to add to its gains closing +1.50% to 87.42. Professor Michael updated Buzz readers that although demand in China did not appear to be slowing, Brent crude appeared to be overvalued by about $10 to $15 per barrel. "That does not mean it is about to correct. Overbought can stay overbought," he warned.
Metals were mixed. Gold continued its streak adding +2.30 to 764.50, but silver and copper finished lower. Silver fell -0.16 to 13.69 and copper lost -5.05 to 363.55.
For more summaries of what happened today, click on Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.
Here's a preview of Wednesday's trading session. Click here for the full trading radar.
8:30 CPI: 0.2% cons
8:30 Core CPI: 0.2% cons
8:30 Housing starts: 1285 k
8:30 Building Permits: 1300 k
10:30 Crude Inventories: -1674 k prior
2:00 Fed's Beige Book
Some notable companies reporting:
BMO: MO, KO, JPM, MAN, UTX
AMC: ETFC, EBAY, LEG, NE, WM
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: SIRI, SCHW, BSC, AAPL, APKT, CML, IWO, YHOO, NILE, CIEN, AKAM, VMW, AMLN
Some bearish trade or investment ideas: XBD, BKX, SPX, GS, GVA, GRMN, GOOG, SPG, ESS, AVB, INP, IFN, SAY, HDB, IBN, TTM, PTI, DRYS, EQUIX
It seemed like a really long day today. Rest up and we'll see you bright and early tomorrow morning. Have a great night!
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