Minyanville's Market Recap: Northern Rock Scares the U.S, Markets End Flat
Markets received a scare early morning by Northern Rock. Major indexes ended flat.
Markets received quite a scare this morning as Northern Rock, the U.K.'s third largest lender by gross mortgages, stated it would receive emergency funding from the Bank of England. Northern Rock shares plunged 26% on the news falling to a six-year low. (From Bloomberg) Minyan Peter offered on the Buzz that "the U.K. interbank market needs to remain front and center." Please read Minyan Peter's Minyan Mailbag for his explanation on why Europe matters more.
Merrill Lynch (MER) did not help the bull case either after announcing it had made fair value adjustments for potential losses stemming from this summer's subprime mortgage crisis. Merrill finished the day down -0.65%, and Morgan Stanely (MS) lost -1.02%. Goldman Sachs (GS) and Bear Stearns (BSC); however, resisted the selling pressure by gaining +1.1% and +2.0% respectively. Minyan Peter has been warning of how banks make money. Please read his article Bank Earnings 103: Reading Bank Balance Sheets. In addition, get an understanding of what caused it all in our Subprime Slime lander page.
Speaking of, homebuilders were a bright spot today. Hovnanian's (HOV) CEO ARA Hovnanian stated this morning the bottom of the housing market was very near and that a recovery would not take place until 2009. Professor Zucchi agreed by stating it was the obvious. HOV proceeded to gain +9.7% on the day. Other notable mentions were Toll Brothers (TOL)gaining +4.1%, Lennar (LEN) adding +2.5%, and D.R. Horton (DHI) adding +5.0%. Get more of an in-depth summary of what happened real-time on the Buzz by clicking on our Buzz Bits.
In other news, economic data released throughout the day failed to wow investors. See below for the details. In addition, please read Professor Depew's daily column Five Things You Need To Know for more color on these figures.
Retail sales: +0.3% vs. +0.5% cons.
Import Prices m/m: -0.3% vs. +1.5% cons.
Current Account Balance: -$190.8 bln vs. -$190 bln cons.
University of Michigan Sentiment: 83.8 vs. 83.5 cons.
Business Inventories: +0.5% vs. +0.3% cons.
Industrial Production: +0.2% vs. +0.3% cons.
Capacity Utilization: 82.2% vs. 82.0% cons.
Below is a recap of the idea flow on today's Buzz & 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: PCLN, CSCO, YHOO, YGE, C, NVT, BCSI, NOVL, HRZ, WWY, UTX, NNWK, NSIT, IRBT, NYX, XCN, CWTR, BSC, PTR, EBAY
Some bearish trade or investment ideas: INTC, DBRN, CAH, GLD, AEM
The markets are looking ahead to next Tuesday as the Fed will decide on interest rates. Also in the cards, a number of financials will be reporting throughout the week. See below for Monday's session, and be sure to click here for the full trading radar.
8:30 NY Empire State Index: 18.0 cons.
Be safe, Minyans. Ya'll have a good weekend!
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