Minyanville's Market Recap: Stocks Fall, Housing, Financials Paint Ugly Picture
Stocks fall, Financials and housing led the way in today's slow trading day.
The decline in the S&P was largely led by the financial sector. The bearish sentiment was due to Lehman Brothers (LEH) shooting itself in the foot publishing a report downgrading Countrywide's (CFC) estimates. In downgrading Countrywide's preferred stock, Lehman cited "continued extraordinary weakness in secondary market pricing for non-conforming loans…" Lehman's stock closed down over 4%. Other notable laggards were JPMorgan (JPM) down 2.3%, Bear Stearns down over 4%, and Goldman Sachs (GS) down almost 1%. Please have a look at Toddo's Random Thoughts as he warns of the performance of the financials.
The homebuilders took a large beating today as well. A report of existing home sales declined 0.2% during July, and the national median selling price slipping further, another 0.6% on a y/y basis. In addition, Reuters reported that job losses due to continued weakness in housing could number as much as 1 mln. Among the carnage were Meritage (MTH) losing 9%, D.R. Horton (DHI) losing 5%, and Ryland (RYL) finishing down 6.5%. For more insight, please read Professor Depew's Five Things You Need To know.
Home Depot (HD) was another story that weighed heavily on the minds of Wall Street. More details of the sale were released today showing Home Depot agreed to an $8.5 bln figure, 18% less than previously negotiated. Please read Professor Ford's The Liquidity Addiction for more of an understanding of today's market behavior.
In some merger news, U.S. Steel (X) agreed to acquire Canadian steelmaker Stelco for $1.1 bln. Analysts expect the deal to strengthen U.S. Steel's position in North America. (From WSJ).
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. In addition please click on our Buzz Bits for more in-depth summaries of what happened real-time during today's trading session.
Some Bullish trade or investment ideas: SYNA, IOM, ANAD, SPX, AOB, ESRX, BIOS, MO, NILE, RHB
Some Bearish trade or investment ideas: XLV, PPH, IYR, OIH, BKX, CFC, AAPL, MA, FLS, BCSI, TOFC, PSA, FXI
The tape is expected to be thin all week. Toddo warns to trade light when eating thin mints. In addition always be wary of market sentiment as Professor Katsenelson warns in his article, Why Good Companies Aren't Always Good Buys. Have a good night, Minyans! See you bright and early tomorrow morning!
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