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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.

Stocks ended the day flat in a slow trading session. The Dow closed up +0.13% to 13,442, the S&P 500 add +0.02% to 1,484, and the Nasdaq Composite finished up +0.04% to 2,602.

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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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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