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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!

Major indexes took a beating today as credit jitters pounded the Street. The Dow ended down 280 points at 13041.85, Nasdaq ended down 60.61 points at 2500.64, and the S&P ended down 34.43 points to finish at 1432.36.

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!
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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