Day Traders Diary
12/5/08
The bad news keeps coming. The November unemployment number jumps to 533,000, a 34 year low. This is only the fourth time in 58 years that the U.S. lost half a million jobs in one month. Unemployment jumped to 6.7%. No more sugar-coating the economic data. It's bad. The Dow Jones Industrial Average fell 84 points to 8,291. The S&P 500 dropped 8 points to 836, while the Nasdaq Composite shed 12 points to 1,433. So far the stock market losses are subdued. A few of the financials are in the green. Merrill and Bank of America agreed to their merger today. Now comes the mess of putting them together. BusinessWeek wrote a positive article on Bank of America. Dick Bove, on the other hand, lowered his estimates for Bank of America and anticipates a need to raise more capital and a cut in the dividend. Great. Citigroup closed their deal to sell their German operations for $6.6 billion. That's good. Goldman Sachs is modestly higher even though they had their numbers cut. Capital One is down 4% on a downgrade. They agreed to buy a Chevy Chase Bank earlier in the week. The averages pushed lower through the first hour following news that mortgage delinquencies are getting worse. Not much good news out there. The commodities are getting hit. Sonoco is down 18% after cutting their outlook. Chesapeake Energy is down to $10 a share. The stock was $70 back in July. Restaurant company, Buffalo Wild Wing is down 11% on a downgrade. One stock trading up pretty good is Hartford Financial. The stock is up 40% after the company's presentation regarding their strong capital base. After the first hour the Dow was down 200 points. The Nasdaq declined 34 points. Through the morning the averages remained in the red, but the financials are modestly in the green. In the afternoon the averages remained in the red, but off the lows. The financials are looking better and a number of retailers are moving into the green. Headinginto the last hour the rally accelerated pretty good. Maybe someone pushed the wrong button. We went from most stocks being in the red, to most stocks being in the green. Only the commodities are still weak. Part of the rally is due to the Fed buying $5 billion in Fannie and Freddie debt which hopefully will result in lower mortgage rates down the road. In the last hour the Dow rose over 200 points. The Nasdaq jumped over 50 points. What a turn around. The Dow Jones Industrial Average finished up 259 points, or 3%, at 8,635, leaving the blue-chip index down 2.2% for the week. The S&P 500 rose 30 points, or 3.7%, to 876, off 2.3% on the week. The Nasdaq Composite climbed 63 points, or 4.4%, to 1,509, down 1.7% for the week.
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