Stocks fell and posted losses for the week, as investors seeking stability after a volatile week weighed news of rising consumer prices in February, which dimmed hopes that the Federal Reserve can cut interest rates to give the economy a needed boost. Investors have been hoping that Fed, will soon cut rates to prevent a drying up of liquidity in the financial system, as fear of a credit crunch were fueled by the meltdown of the sub-prime mortgage market. Rate cuts have been taken out of the near term picture because of the inflation number.
Today, the Dow Jones industrial average closed down 49.27 or 0.41% to 12,110.41, the broader S&P 500 closed down 5.33 or 0.38% to 1,386.95, while the Nasdaq closed down 6.04 or 0.25% to 2,372.66. For the week, the Dow dropped 1.3%, the S&P lost 1.1% and the Nasdaq lost 0.6%.
Market breath was negative. Trading volumes showed 2.1 billion shares exchange hands on the New York Stock Exchange and 2.1 billion on the Nasdaq stock market. Advancing issues outpaced decliners by 5 to 3 on the NYSE, and by 18 to 11 on the Nasdaq.
Mixed economic news and technology stocks continued to dampen the market. The quarterly options expiration, in which stock index futures and options and individual stock futures and options all expire at the same time, contributed to the choppiness. It appears that for the near term, all selling is over and we’re probably going to consolidate for the next few sessions. The next big focus for investors will be the two-day Federal Reserve policy meeting next week.
The inflation numbers that came out were above the Fed’s targets. The CPI rose 0.4% in February, against the expected 0.3%. The Core CPI, which strips out volatile food and energy prices, rose 0.2%, as expected. Industrial production rose 0.1% in February, versus forecasts for a rise of 0.3%. The University of Michigan’s consumer sentiment index, fell to 88.8 in March from 91.3 in late February. Economists thought it would fall to 89.
Shares of Caremark RX closed down $0.46 to $62.29, after it approved a $24 billion takeover bid from drugstore CVS. Stock of CVS closed down $0.44 to $32.90, after CVS won the battle over the company against Express Scripts. The deal will allow CVS, to expand its prescription benefits business and mail-order operations at a time when traditional pharmacies are under pressure from mail-delivery facilities.
Shares of Wal-Mart closed up $0.29 to $46.29, after it stated that it was withdrawing its application for limited banking operations, after critics said the world’s No. 1 retailer might use the bank as a stepping stone to offer a broader range of financial services. They have decided to better focus on other ways to serve customers.
Stock of Accredited Home Lenders closed up $1.55 or 17% to $10.98, after saying it will sell $2.7 billion in loans at a discount as a means of buying time while it contends with a cash crunch. The loan sale is expected to be completed within days, and will result in a pretax charge of about $150 million. The loans are being sold at a substantial discount to alleviate pressures from margin calls.
U.S. light crude oil for April delivery fell 44 cents to settle at $57.11 a barrel on the New York Mercantile Exchange.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
30-day risk-free trial
Please do your own research, and verify all information before acting on it. This summary of Cramer’s picks is not intended to replace watching the shows, where his comments about the stocks often include advice about entry and exit points.
