The Week In Review
2/23-2/27/09
February 27, 2009The major averages sank on the open following a revised fourth quarter GDP to negative 6.2% and the government's plan to increase their stake in Citigroup to 36% diluting current shareholders. The Dow Jones Industrial Average fell 134 points to 7,047 which is a new 13 year low. The S&P 500 Index shed 17 points to 735, a 12 year low, and the Nasdaq Composite dropped 18 points to 1,372, a seven year low. The financials are leading the weakness. Citigroup is down 26%. Investors fear more banks will succumb to the fate of Citigroup. Bank of America is down 12%. Blackstone is down 2% after reporting a $406 million loss. Some banks like JP Morgan are holding up well. The CEO Jamie Dimon believes his bank will hold up well under any stress test. After the first half an hour, the Nasdaq improved. IBM, Google, and Dell are higher. Dell missed sales estimates, but earnings beat due to cost cutting. In the retail sector, Deckers Outdoors is down 19% as their wildly popular Hugg shoes saw sales come back down to Earth. Kohls and Big 5 Sports are lower even though they beat by a penny. The healthcare sector has been walloped in the several days on concerns the government will cut spending on Medicare. Barclays and the Wall Street Journal wrote positive pieces on the sector, but it isn't helping much. After the first hour, the Dow was down just 70 points. The Nasdaq down 3 points. Through the morning the Nasdaq held firm near the unchanged level. The big techs look good. The Dow is working its' way back toward the unchanged level, without any help from the big banks. Citgroup and Bank of America remain weak near the lows of the day. In the afternoon, more dividend cuts. GE slashed their dividend to 10 cents from 31 cents. GE initially bounced, then sold off, then bounced, then sold off again. No dividends are safe. A healthcare provider, Aetna is finally bouncing after initiating a share buyback plan. Heading into the last hour, the averages were holding in there even thought the financials look awful. Scary. In the last hour, the averages pushed lower closing at the lows of the day, lows for the month, and lows for the year. Never ending. The Dow Jones Industrial Average finished down 119 points, or 1.7%, at 7,062. The blue-chip index declined 4.1% for the week, 11.7% for the month, and 50% from the highs of 2007. The S&P 500 shed 17 points, or 2.4%, to 735, leaving it with a weekly loss of 4.5% and a monthly hit of 11%. The Nasdaq Composite fell 13 points, or 1%, to finish at 1,377, down 4.4% for the week and 6.7% for February.
February 26, 2009
U.S. stocks opened higher Thursday led by the financials thanks in part to more clarity from the government regarding the stress test to bolster the banking system. The Dow Jones Industrial Average gained 68 points to 7,339. The S&P 500 rose 8 points to 773. The Nasdaq Composite added 5 points to stand at 1,430. The financials look good. Bank of America is up 11%. The bank may sell more assets they inherited from Merrill to raise capital. JP Morgan is up 10% after indicating they will be profitable in the first quarter. GE is up 5% and American Express is up 3% so the financials within the Dow are performing well. The commodities are rallying particularly oil. Ensco, El Paso, and Rowan are all up over 6% on earnings. In the retail space, Sears, Dean Foods, Sanderson Farms, and Cooper Tires are all higher following earnings. Aeropostale is higher thanks to an upgrade. After the first hour, the Dow rose 100 points. The Nasdaq rose 10 points. Everything looks good except for healthcare. Humana is dropping 12%, Unitedhealth Group is down 11%, and Wellpoint is down 7%. Investors are nervous about the government making more cuts to the insurers. The government's influence on this market is tremendous. Sallie Mae's shares dropped 30% on a new government provision that may limit the companies business. After the first hour, the Dow had a second jolt to the upside thanks to a 4% jump in IBM shares. Big Blue is lifting guidance modestly and saying a lot of positive things. Unfortunately, the IBM euphoria wore off quickly sending the averages lower. The big techs, the big banks, and many commodities are still trading higher. Entering the last hour, all the major averages were in the red. Humana is now down 20%. Sallie Mae is down 36%. Fewer and fewer stocks are in the green. In the last hour, the averages sold off closing near the lows of the day. The Dow Jones Industrial Average fell 88 points to 7,182. The S&P 500 declined 12 points to 752 while the Nasdaq Composite shed 33 points, or 2.4%, to 1,391.
February 25, 2009
The one day rally is over. The President's State of the Union did little to spark any enthusiasm on Wall Street. The Dow Jones Industrial Average fell 36 points to 7,314. AT&T is up one percent on an upgrade. The S&P 500 declined 4 points to 768 and the Nasdaq Composite shed 11 points to 1,430. More disappointing earnings keep coming in. Dreamworks and Martha Stewart are both down 5% following earnings. Wynn Resorts is down 10% after missing estimates by a wide margin. Those leveraged casino companies are in trouble. Frist Solar is down 17% after providing a cautious outlook for 2009. The financials surged yesterday. Today it's back to reality. Most of the big banks are getting hit hard. Allstate is down 7% after cutting their dividend. BB&T raised their dividend, but Wall Street doesn't want to see that. The stock is down 5%. The retail sector is mixed. TJX, Dollar Tree, and Saks opened higher. Dicks rose 2% on an upgrade. The rest of the sector is weak. After the first half an hour, the averages pushed lower on weak housing numbers. The Dow dropped over 140 points. The Nasdaq declined 28 points. Here we go again. Through the morning the averages remained weak, but off the lows. A majority of the financials have recovered most if not all their losses. That's good. Fed Chairman Bernanke for a second straight day is trying to ease fears of bank nationalization. He stated there is no government plan to nationalize Citigroup. At 2 o'clock, the Treasury provided more details of the stress test for banks which initially helped them, then hurt them, then helped them once again. Entering the last hour the major averages were back to the unchanged level with the big banks in the green. The averages had a nice rally in the last hour, but unfortunately it completely fizzled into the close. Not much fun. The Dow Jones Industrial Average finished down 80 points at 7,270. The S&P 500 fell 8 points to 764 while the Nasdaq Composite declined 16 points to 1,425.
February 24, 2009
U.S. stocks on Tuesday opened modestly higher following yesterdays drop to a 12-year low. The Dow Jones Industrial Average gained 59 points to 7,174. The S&P 500 Index added 7 points to 751 while the Nasdaq Composite rose 18 points to 1,406. The economic news isn't getting any better. Housing prices dropped 2.5% in December and 19% year over year. All eyes are on the financials once again. JP Morgan opened higher by 2% after cutting their dividend. Good news for them, but if the best capitalized bank is cutting their dividend, then what does that mean to the rest of the industry which is not as well capitalized? Most financials opened higher, but then sold off. GE reversed course, now trading down 4% to new lows. Plenty of earnings coming in from a number of retailers. The list includes Office Depot, Target, Macys, Heinz, Radio Shack, Nordstrom, and Home Depot. Nordstrom and Home Depot are higher. Office Depot is down 14% while Radio Shack is down 19%. Marvel Entertainment is jumnping 15% on good earnings. Foster Wheeler is down 20% on a weaker forecast. At 10 o'clock, the consumer confidence number dropped to a record low sending the averages back toward the unchanged level. After the first hour, the Dow had rebounded up 57 points. The Nasdaq rose by 17 points. Through the morning the averages remained in the green. The Dow did rally over a 100 points before pulling back. In the afternoon the averages rebounded with the Dow jumping over 100 points. The rally is being attributed to Fed Chairman Bernanke easing fears of nationalization of the big banks. Most of the financials improved following the Fed's speech. JP Morgan is up 10% off the lows. In the last hour, the averages kept moving higher. Thanks Mr. Bernanke. The Dow Jones Industrial Average finished up 236 points, or 3.3%, at 7,350. The S&P 500 added 29 points, or 4%, to close at 773. The Nasdaq Composite gained 54 points, or 3.9%, to finish at
1,441.
February 23, 2009
U.S. stocks opened higher on Monday, supported by a rebound in financial shares, after the government said it would start "stress tests" on banks this week, but kept nationalizations at bay for now. The Dow Jones Industrial Average gained 49 points to 7,413, led by a 15% jump in shares of both Bank of America and Citigroup. The government is in talks with Citigroup and may converting its preferred shares into common equity, The Wall Street Journal reported. The U.S. government may hold between 25% and 40% of Citi, according to the report. The S&P 500 index rose 5 points to 774 while the Nasdaq Composite rose a point to 1,443. Most of the financials are higher. BB&T is up 6% on an upgrade. Outside the financials, things are quiet. The commodities are higher. ExxonMobil and Conoco are both up 2% on upgrades. The Nasdaq moved into the red shortly after the open. Google is lower after having their estimates cut. Palm is up 4% on an upgrade. The healthcare sector is weak on concerns of more government regulations. Humana is down 16% even though they reaffirmed numbers. Unitedhealth Group is down 10%. After the first half an hour, the Dow remained higher by 43 points. The Nasdaq was in the red by 6 points. After the first hour, all the major averages sunk into the red. The Dow dropped 50 points. The Nasdaq declined 23 points. Citigroup and Bank of America are still in the green, but that's about it. The unthinkable is now once again thinkable. Through the morning and into the afternoon, the averages pushed lower. Citigroup and Bank of America are modestly in the green. The big techs are getting hit. Humana is down 25%. The commodities are selling off as well. Not good. In the middle of the afternoon, the averages rebounded as the government reiterated a policy of private banking. Then we sold back off on comments that AIG will report the worse quarter and the biggest loss in U.S. history. Who was running this company? In the last hour, the averages sold off to new lows. The Dow Jones Industrial Average finished down 250 points, or 3.4%, at 7,114, marking its lowest close since May of 1997. The broad S&P 500 index ended down 26 points, or 3.5%, at 743, its lowest close since December or 1996. The Nasdaq Composite fell 53 points, or 3.7%, to 1,387.