Minyanville's Market Recap: Credit Jitters And FOMC Send Markets Tumbling
Credit Jitters and the FOMC Minutes scared the bulls away. Dow tumbles 280 points!
The financials got off to a bad start this morning after a number of issues around the world intensified the anxiety stemming from the credit markets. DBS Group of Singapore fell over 2% after admitting it would have to fund almost $1 bln in asset-backed commercial paper it could not roll over due to lack of investor demand. Barclay's (BCS) took a hit as it was rumored to have heavy exposure to four structured investment vehicles, and State Street (STT) was also reported to have a $22 bln exposure to asset-backed commercial paper conduits as well.
Compounding the pressures were downgrades by both Lehman and Goldman Sachs on various brokers citing valuation and "highly uncertain" earnings. Ironically, Lehman Brothers (LEH) led the decline with a loss of 6% followed by Morgan Stanley (MS) losing over 4%, Goldman Sachs (GS) losing 3.93%, and Bear Stearns (BSC) losing 3.4%. Please read Minyan Mailbag: A Bird's-Eye View Of The Credit Conundrum as one of our readers, Minyan Peter, provided a great analysis of the credit markets.
Weak home prices as shown by the S&P/Case-Shiller home-price index fell 3.2% last quarter from the same period in 2006. The decline was the worst quarterly decline since the index began in 1987. For more analysis, please read Professor Depew's Five Things You Need To Know.
Weak consumer confidence did not help the bull case either. The real mover, however, was the release of the FOMC Minutes in the afternoon where the major indexes subsequently sold off. Please read Mr. Practical's Mailbags, The Fed's Limitation and The Problem With Quants as he comments on the Fed's decision-making. Wall St. is now focused on the Fed's next event on Friday where Chairman Bernanke will be speaking.
Below is a recap of the idea flow on today's Buzz and Banter. Please note that stocks may appear on both Bullish and Bearish categories due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: AKAM, NEM, DF, TAP, UST, PEP, QLTI, LDG, NEU, NEM, VIVO, VLCK, FDRY, ISRG
Some bearish trade or investment ideas: SPX, ATI, CGX, FMD, AAPL, GRMN, WYNN.
Tomorrow is Hoofy and Boo Wednesday! Be sure to check back as those critters have got a great video for you. In the meantime, have a goodnight!
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