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Minyanville's Market Recap: Superconduit by the Treasury, Markets Fall

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The Treasury led talks to form a $100 bln Superconduit. Investors may been spooked. Markets fell.

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Major indexes fell today. The Dow Industrials lost -0.77 to close at 13,984, the S&P 500 lost -0.84% to close at 1,548, and the Nasdaq Composite lost -0.91% to close at 2,780.

Credit concerns likely spooked investors as news of the Treasury hosting talks over the weekend with Citigroup (C), JPMorgan Chase (JPM), and Bank of America (BAC) topped headlines. The banks will join forces in creating a $100 bln Superconduit that will act as a buyer of last resort to shore up the asset-backed commercial paper market (ABCP). (From WSJ) Professor Depew suggested the move was meaningless because it dealt with the ABCP market and not subprime mortgages. For more, read Professor Depew's Special Edition Five Things You Need To Know.

Compounding the selling pressure was news that Goldman Sachs (GS) downgraded the financial sector to "underweight" before the third quarter earnings season. The firm stated banks were likely to reduce their 2008 profit forecasts due to declining revenue from debt trading and underwriting. (From Bloomberg) Toddo noted the Philadelphia Bank Index (BKX) "poked below its 50-day" with the next point of interest at 105.50. Notable stock performances included Lehman Brothers (LEH) losing -3.5%. Merrill Lynch (MER) lost -2.11%, and Morgan Stanley (MS) fell -1.71%. Read more in Toddo's Random Thoughts.

In earnings news, Citigroup reported results for the third quarter. The company stated earnings per share at $0.47 versus analyst expectations of $0.43. Revenues rose 5.8% to $22.6 billion versus $20.81 billion consensus.

Biotech giant Genentech (DNA) reported third quarter results after the bell. EPS came in at $0.73 versus analyst estimates of $0.72 on revenues of $2.91 billion versus $2.92 consensus.

In a bit of M&A news, Danaher (DHR) agreed to buy electronic test and measurement company Tecktronix (TEK) for $2.8 bln. TEK shareholders will receive $38 per share in a cash tender offer, representing a 34% premium to its closing price from Friday. Danaher's president and CEO H. Lawrence Culp Jr. said the acquisition "provides an excellent complement to our existing Electronic Test business." (From WSJ) Professor Guy Adami first mentioned this company in early August in Gone Fishin' With Danaher.

In commodities action, crude oil surged to new highs, adding +2.47 to 86.16 per barrel. Metals were strong as well. Gold added +9.80 to 763.60, copper added +3.25 to 368.50, and silver added +0.012 to 13.91.

For more summaries of today, check out Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.

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

Economics

9:00 Net Foreign Purchases: $19.2 bln prev
9:15 Industrial Production: 0.1% cons
9:15 Capacity Utilization: 82.2% cons

Some notable companies reporting:

BMO: JEF, JNJ, WFC
AMC: CSX, INTC, YHOO

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: STP, TSL, MSTR, TELK, OIH, CFSG, INSP, PAAS, CROX, WFT, IYT, PRM, ABR, IAT, SHW, BDK

Some bearish trade or investment ideas: HGX, VMW, SPX, GHL, AMG, PLCE, EEM, AAPL, GS, FXI, TM,

Hope y'all had a happy Monday! Have a great night!
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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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