The Week In Review

12/1-12/05/2008

December 5, 2008
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. Heading
into 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.


December 4, 2008
The markets are set to open lower once again following more dismal economic news. Today we received weak, weak, weak November retail sales. The Dow Jones Industrial Average fell 63 points to 8,528. Two Dow components, AT&T & DuPont are slashing thousands of jobs. Both opened lower. The S&P 500 shed 8 points to 862 while the Nasdaq Composite declined 15 points to 1,476. After the first half an hour, the averages started to improve. Many of the retailers are higher even though most saw big declines in sales. The worse the sales decline, the better the stock is performing. Abercrombie & Fitch saw sales drop 28% yet the stock is up 6%. Walmart is up 2% as sales actually improved in November. The financials are trying to hold in there. Capital One is down 2% after announcing the acquisition of Chevy Chase Bank for $500 million. Toll Brothers is up 7% after reporting a quarterly loss. After the first hour the averages remained in the red, but not by much. Dow component, Merck is down 3% after fourth quarter guidance missed its target. Entering the lunch hour the averages moved lower. The retailers still look good while a select number of financials are holding in there. Morgan Stanley is up 11%. Entering the last hour the averages remained in the red. Ford and GM are trading lower. GM is down 11%. They don't seem to be convincing Congress. In the last hour the averages quickly accelerated to the downside. Investors seem scared about the unemployment numbers due out tomorrow morning. The Dow dropped over 300 points in the last hour before recovering into the close. The Dow Jones Industrial Average finished down 215 points at 8,376. The S&P 500 shed 25 points to 845, while the Nasdaq Composite dropped 46 points to 1,445.


December 3, 2008
One big down day on Monday. A nice rebound yesterday and more weakness today. The Dow Jones Industrial Average fell 173 points to 8,245. The S&P 500 declined 19 points to 828 while the Nasdaq Composite shed 33 points to 1,416. Plenty of bad news with a few bright spots. Research in Motion is down 3% after lowering guidance. The stock is down 75% since August. The techs are weak. One trading higher is Marvell, up 13% on good earnings. Schlumberger is down 12% after lowering guidance. The stock is down 60% since August. The commodoities are very weak. Freeport McMoRan is down 20% after lowering guidance as well. The stock is down 80% since August. The largest oil driller, Transocean is down 10% to new lows. Now the few bright spots. Pfizer is higher on an upgrade. The financials are down, but not by much. Goldman Sachs is higher. One encouraging sign is the drop in the 30 year mortgage to 5.5% after the Fed started buying mortgage backed securities. Last week, mortgage applications rose 112% to a record level. The CEO of PIMCO, Bill Gross indicated this morning on TV that mortgage rates could drop to 5% to 4.5%. That would be GREAT. The best news I've heard in a while. The retail sector is holding in there. Amazon is up 7% following robust sales over the weekend and on Monday. After the first hour the Dow was down 50 points. The Nasdaq was unchanged. By 11 o'clock all the major averages were in the green. Amazing. During the lunch hour the averages remained in the green, up as much as 100 points. Jos. A Bank is up 9% after beating estimates by 9 cents. How did a retailer beat estimates? After the lunch hour the averages moved back in the red. At 2 o'clock, a weak Beige book sent the Dow down over 100 points, but the averages rebounded following this news led by the financials. Morgan Stanley is jumping 15% on rumors Goldman Sachs would buy them. I don't know if that's logical. Bank of America is higher after the CEO issued a statement saying they think the economy will rebound by the second half of next year. Many of the techs have turned around including Research in Motion. In the last hour the averages took off. I'm not complaining, but it's crazy. Before the market closed, the WallStreet Journal broke a story that the Treasury is working on a new plan to lower mortgage rates using Fannie and Freddie. I hope it works. The Dow Jones Industrial Average finished up 172 points, or 2.1%, to end at 8,591. The S&P 500 added 21 points, or 2.6%, to stand at 870 while the Nasdaq Composite gained 42 points, or 2.9%, to 1,492.



December 2, 2008
The averages are set for a little bounce a day after the Dow saw its fourth-biggest point drop on record. The Dow Jones Industrial Average gained 59 points to 8,210. GE is up 3% after lowering fourth-quarter earnings to the low end of range. The company continues to reiterate they will maintain the dividend. The S&P 500 index gained 12 points to 828 while the Nasdaq Composite advanced 14 points to 1,412. Most of the financials are up after getting slaughtered yesterday. Goldman and Morgan had their earnings estimates cut. The Wall Street Journal thinks Goldman will kitchen sink the quarter and lose $2 billion. The stock is down 2.5%. JP Morgan is making news by cutting 9,200 jobs at Washington Mutual, half in Seattle. Happy Holidays. The retail sector continues to report dismal results. Sears missed estimates by a wide margin, actually reporting a loss. The stock however is higher. Staples is up 10% even though net income dropped 43%. The commodities are rebounding this morning except for the fertilizers. Mosaic is down 5% after cutting production. The averages took off ahead of a speech by President-elect Obama. After the first hour the Dow was up 157 points. The Nasdaq improved by 29 points. During the lunch hour the averages pushed higher. But not all stocks are higher. Research in Motion is down 8% on no news. Goldman Sachs is down 6%. 3M is down 4% on a downgrade. Sanderson Farms is down 5% as one of their competitors, Pilgrims Pride, goes under. As the afternoon progressed, the rally fizzled. Here we go again. The averages drifted down to the unchanged level before bouncing back. Entering the last hour, the Dow was up 100 points. It promptly sold off over to rebound once again. Crazy market. The Dow Jones Industrial Average gained 270 points to end at 8,419. The S&P 500 Index gained 32 points or 4% to 848, while the Nasdaq Composite rose 51 points to 1,449.


December 1, 2008
Last week was great. The major averages sprinted to the end. racking up 10% gains to end an ugly month. Today, back to reality. The Dow Jones Industrial Average fell a quick 249 points, or 2.8%, to 8,582. The S&P 500 index fell 27 points, or 3%, to 867, while the Nasdaq Composite lost 47 points, or 3%, to 1,487. Manufacturing gauges in China, the euro zone and Britain each showed significant drops, with the Chinese and British gauge dropping to record lows. This week, we expect plenty of bad U.S. economic data culminating in a dismal November unemployment number on Friday. The financials are leading the sell off and a sharp rebound last week. Morgan Stanley, Goldman Sachs, and Citigroup all had their numbers cut today. Citigroup is looking to sell their Japanese divisions. Prudential is down 8% even though Citigroup upgraded it and expects the company to earn $7 a share next year. GE is down 7% ahead of a webcast tomorrow regarding business. The shoppers were out in full force over the weekend spending a little less than last year. Today is Cyber Monday when shoppers shift to the Internet for deals. So far it isn't helping. All the retailers are lower. The commodities are all lower as well. No production cuts from OPEC. The techs are lower as well. Yahoo is modestly higher on more rumors of a merger with Microsoft. After the first half an hour, the averages went from bad to worse. The Dow dropped over 350 points. The Nasdaq declined 67 points. Through the morning the averages remained weak. President-elect Obama is introducing his security team and the new Secretary of State, Hillary Clinton. Through the morning and into the afternoon the averages moved lower. Over the last five days, the Dow jumped 1350 points. Today we've given back over 400 points. Frustrating market. Entering the last hour the Dow remained down over 400 points. The Nasdaq was down 100 points. Fed Chairman Bernanke spoke this afternoon. He did little to help the averages, but he did instill a rally in the bond market. In the last hour, we had the trifecta with the Secretary Treasury, Paulson speaking. All talk and no action. The Dow fell over 500 points. Meredith Whitney, the bearish banking analyst had more effect on the markets in the last hour than anyone else. The Dow Jones Industrial Average slumped 679 points, or 7.7%, to end at 8,149, marking the blue-chip average's fourth biggest point drop on record. The S&P 500 index fell 80 points, or 9%, to end at 816 while the Nasdaq Composite lost 137 points, or 9%, to finish at 1,398.