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Minyanville's Market Recap: Late Day Plunge Led By Tech, Markets Close Lower


Stocks were hitting their highs until JP Morgan spoiled the party. A late day plunge led by Tech had the markets closing lower.

Stocks plunged in the last hours of today's session despite lofty gains early in the trading day. The Dow Industrials fell -0.46% to 14,015, the S&P 500 fell -0.52% to 1,554, and the Nasdaq Composite fell -1.4% to 2,772.

The major indexes were trading very strongly hitting intraday highs with the Dow up over a hundred points. Despite the strong statistics (positive breadth and the low dollar), Toddo noted on the Buzz that he had a feeling of a "massive reversal lower."

After a series of negative news, major indexes sold off led by a plunge in the tech sector. JP Morgan Chase (JPM) had released a statement stating it was revising guidance on Baidu's (BIDU) revenue expectations to the downside. Toddo noted the fragility in this tape in his Random Thoughts. BIDU proceeded to drop precipitously closing down -38 points to $304.35, a loss of -11%. Other tech stocks followed in the same manner. Apple (AAPL) lost -3.0%, Research In Motion (RIMM) lost -6.5%, and Google (GOOG) lost -1.2%.

Adding to the pressures, statements by European Central Bank council member and president of Germany's Bundesbank Axel Weber were released also in the late afternoon. Weber suggested that further action was necessary by the central banks due price increases taking place on a broad front. Weber noted monetary policy that monetary policy could not lose sight of its primary mandate – even if it meant no longer supporting the robust economy or being restrictive (From Bloomberg). Read Minyan Peter's article How European Banks Affect The U.S.

Further, Moody's (MCO) downgraded $33.4 bln of securities backed by subprime mortgages. The securities, which were issued in 2006, represented 7.8% of the original dollar volume of securities rated by Moody's. The downgrades came after a report this morning by RealtyTrac showed U.S. home foreclosures doubled in September. (From Bloomberg) Surprisingly, homebuilders maintained a strong stance today. Ryland (RYL) closed up +5.7%, Toll Brothers (TOL) added +1.0%, and Meritage Homes (MTH) added +2.0%. Read Professor Zucchi's The Recent History And Future Of Housing as well as Minyanville's Subprime Package for more on the housing crisis.

Commodities were strong today. Crude surged +2.03% to $82.95 per barrel. Silver gained +0.97% to 13.80 and Gold gained +0.54 to $750.20. Professor Lewis noted on the Buzz of gold strength ,not just in dollars, but also making a new 52-week high in euros. See his buzz as well as other real-time summaries in Minyanville's Buzz Bits.

Here's a preview for Friday's trading session. Click here for the full trading radar.


8:30 Retail Sales: 0.2% cons
8:30 PPI: 0.4% cons
8:30 Core PPI: 0.2% cons
10:00 Business Inventories: 0.3%
10:00 Michigan Sentiment-Prel: 84.0 cons


Before: GE

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: YHOO, FRPT, MON, AGU, POT, TRA, SPX, APKT, NOVL, MA, COST, TGT, M, TTPY, ARAY, TTRY, JTX, ISRG

Some bearish trade or investment ideas: JWN, DXY, BIDU, GOOG, VMW, AAPL

Thursday nights are the best nights for all of you college folks. Be safe and have a great night!
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No positions in stocks mentioned.

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