PortfolioCrafter - Market Commentary 12/12/07
December 12th, 2007 / 9:47 pm / by portfoliocrafter
The Dow closed at 13,473.90 after increasing 41.13 points. Also, the Nasdaq rose 18.79 points to close at 2,671.14. Besides, the S&P 500 increased 8.94 points to close at 1,486.59. There was a lot of volatility in the market this week, due to disappointing news for investors about cuts in rates. Today there were warnings from many banks, such as Bank of America, Wachovia and PNC disclosing that as a result of bad credit conditions, the earnings for the fourth-quarter were likely to disappoint the investors.
Also, there were speculations about Citigroup about new CEO. Besides, Morgan Stanley was considering employee layoffs as part of cost-cutting measures. The KBW Bank Index, which measures 50 of the largest banks in the U.S. was up 2.7 percent ahead of Tuesday’s Federal Open Market Committee meeting. The Amex Securities Broker-Dealer Index also increased about 3.8 percent on Wednesday.
The financial sector remains unclear about the extent of credit crisis. When the Federal Reserve provided not so positive news about rates yesterday, the Dow fell almost 300 points. Today, the market rallied during the morning, but it cooled off after the Fed said it was teaming up with other banks to pour billions into banking systems around the world.
There are still fears of recession next year, but recent reports have suggested that some economic strength exists outside of the housing and credit markets. Nevertheless, many stocks seem to do well this time of the year and that might be helping offset some of the bigger worries.
Analysts believe that the upcoming brokerage earnings, which kicks off tomorrow Thursday by Lehman Brothers are worrying many investors. The brokerage earnings are likely to be worse than many people expect.
All the best,
Manuel Jesus-Backus
The Portfolio Crafter
