Traders-Blog.com

It was another day of losses for the market. The Dow fell 65.86 points to close at 13,248.73. Meanwhile, the Nasdaq declined 17.30 points to close at 2,619.83. The S&P also presented losses after declining 9.63 points to close at 1,462.79. Again, declines in markets were probably due to concerns from investors about financial sectors and credit markets.
 
During the third quarter of 2007, national home prices showed their biggest quarterly drop in 25 years, Freddie Mac’s home price index fell 1.3 percent on an annualized basis in this quarter. Analysts say that high mortgage costs and more strict lending standards from banks have caused a big challenge for consumers to buy houses.
 
According to Kenny Landgraf, founder of Kenjol Capital Management, usually negative news from banks tend to affect markets and indexes. Besides, worries about subprime mortgages and potential aid from the White House are topics that have many investors concerned about.
 
On Friday, November jobs reports will be released. Hopefully, positive numbers on reports will help markets a bit this week. In addition, next week the Fed will have a policy meeting. Although some investors seem very optimistic about upcoming news, it is still uncertain if the Federal Reserve will cut short term interest rates or if job reports will show an increase.
 
JP Morgan Securities said today that debt markets will probably drag on profits for companies, such as Morgan Stanley, Lehman Brothers and Goldman Sachs. Also, a small number of firms were downgraded, such as Bear Stearns, and JP Morgan.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

It was a difficult day for the market. The Dow declined 0.4 percent to close at 13,314.57. Also, the Nasdaq declined 23.83 points to close at 2,637.13. Besides, the S&P 500 had a decline of 8.72 points to close at 1,472.42. The decrease in the market can be blamed to concerns from investors about the housing market as well as the credit markets. Today, the government announced that it will provide economic help to subprime mortgage lenders.

Henry Paulson, treasury secretary, provided a summary of steps that the government is taking to help homeowners. Although, Mr. Paulson’s comments relieved some concerns among investors about interest rates, but markets still closed in red. Investors are still waiting for more financial data about financial markets in the coming days.

More news about housing problems includes the worries for performance of Lennar and Morgan Stanley that showed a decline this morning. Also, GM shares fell about 4 percent after news showed that there was a drop in November sales instead of an increase in sales.

Finally, some companies whose shares rose today were the following: Activision Inc, which increased $2.82 or 13 percent to close at $24.97 and Centex Corp. that increased 4.8 percent to close at $21.85. Vivendi agreed to buy a controlling stake in the maker of the “Guitar Hero” music simulator for $9.8 billion to create the world’s largest maker of video games

More reports are due later this week on consumer sentiment and factory orders.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Technology shares slumped and blue chips cut gains near the end of the session Friday, crimping an earlier rally sparked by bets that the Federal Reserve will cut interest rates at its next meeting.

The Dow Jones industrial average added 0.2 percent, with 30 minutes left in the session. The broader S&P 500 index gained 0.5 percent. The tech-fueled Nasdaq composite lost 0.5 percent.

Stocks rallied through the morning as investors welcomed falling oil prices and comments from Fed chief Ben Bernanke that suggested more rate cuts are on the way. The two developments helped ease worries that the turmoil in financial markets could send the economy into a recession.

But gains were limited in the afternoon by tech weakness, caused in part by disappointment about Dell’s quarterly results. By the last hour of the session, the tech weakness had cut into the rest of the market.

“A rate cut would be a shot in the arm to the markets and I think people are taking Bernanke’s speech as meaning that another rate cut is coming, but stocks have been choppy and are going to remain choppy, ” said Dean Barber, president at Barber Financial Group. Bernanke said Thursday night that the Fed remains concerned about the problems in the housing and credit markets and the threat posed to consumer spending and the economy. He said the Fed would remain “exceptionally alert and flexible” leading up to the next policy meeting on Dec. 11, all of which seemed to signal to Wall Street that the Fed will cut rates again.

Traders are currently betting that the central bank will cut rates by at least a quarter percentage point at the next meeting, with some banking on a half-point cut.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks struggled higher Thursday, at the end of a bumpy session in which investors mulled weak home sales and mixed corporate news ahead of a key speech from Fed chairman Ben Bernanke in the evening.

The Dow Jones industrial average climbed nearly 0.2 percent. The broader S&P 500 index ended just above unchanged and the tech-fueled Nasdaq composite ended 0.2 percent higher.

Stocks had rallied for two sessions, with the Dow gaining nearly 550 points as investors jumped back in after Monday’s decline. It was the biggest two-day advance for the Dow on a point basis since October 2002. On Monday, the three major gauges ended the session down by at least 10 percent off the highs hit in October, a decline that fits the technical definition of a “correction.”

Friday brings reports on personal income and spending for October, construction spending for October and the November Chicago PMI - a regional manufacturing read.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks surged Wednesday, with the Dow industrials rallying 331 points, after comments from a Federal Reserve official sparked bets that the central bank will cut rates again at its next policy meeting.

A rebound for the embattled financial sector and plunging oil prices helped Wall Street advance for the second session in a row.

The Dow Jones industrial average gained 331 points, its second-best single day advance of the year. The 30-stock index climbed by as much as 366 points during the session. The broader S&P 500 index rose about 2.9 percent and the tech-fueled Nasdaq climbed 3.2 percent.

Stocks rallied Tuesday as well. The two-day advance boosted the Dow by 546.01 points, giving it its best two-day run on a point basis since October 2002.

Wednesday’s big rally was sparked by comments from Donald Kohn, the Federal Reserve’s No. 2 official. Kohn seemed to signal a change in recent Fed policy, saying that the recent market turmoil has reversed some of the improvements in market functioning seen at the time of the last Fed meeting at the end of October.

He said that the central bank needs to be “nimble” and that it can’t risk a threat to the economy just to teach speculators a lesson.

Stock participants seemed to take this as an indication that the Federal Reserve plans to cut a key short-term interest rate at the Dec. 11 meeting, as investors have been hoping. Investors will be looking to see if Federal Reserve Chairman Ben Bernanke reaffirms this viewpoint when he speaks Thursday night.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks rose Tuesday, reclaiming most of the day’s gains at the end of a choppy afternoon in which investor enthusiasm for recently battered shares was tried by ongoing worries about the economy.

The Dow Jones Industrial Average rose 215 points, or 1.7%, to end at 12,958.4, with all but two of its 30 components ending higher.

The S&P 500 index added 1.5 percent and the Nasdaq composite rose 1.6 percent.

U.S. home prices fell in every region of the country in September, according to the national Case-Shiller price index released by Standard & Poor’s. The study found prices fell 4.5% nationally during the past year. Read Economic Report.

Economists at Goldman Sachs now expect the Federal Reserve to cut interest rates to 3% by mid-2008, down from its earlier forecast of 4%, saying that the worsening housing downturn has pushed the risk of a U.S. recession next year to 40% to 45% from around 30% previously.

Treasury prices slumped, boosting the corresponding yields as investors stepped back after Monday’s bond market rally. Bond prices and yields move in opposite directions.

The dollar gained versus other major currencies. Oil and gold prices slumped.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Wall Street sold off sharply Monday as concerns about a weakening credit market wiped out investors’ enthusiasm about strong retails sales over the holiday weekend.

The Dow Jones industrial average lost 237 points, or 1.8 percent, falling to a 7-month low. The S&P 500 index lost 2.3 percent and fell into negative territory for the year. The Nasdaq composite fell 2.1 percent.

The swoon comes as investors were unnerved by another series of announcements that pointed to continuing problems in the credit markets, the result of home loan debt going bad under the weight of a faltering housing market.

Two banks had bad news: Citigroup Inc. warned it is looking to cut costs — raising the possibility of further job cuts — and HSBC Holdings PLC said it plans to bail out two funds it manages. To do so, Europe’s largest bank plans to move about $45 billion of the fund’s assets onto its balance sheet.

Meanwhile, The New York Federal Reserve, acknowledging “heightened pressures” in money markets that are expected to last through the rest of the year, said it plans to conduct a series of repurchase agreements aimed at boosting liquidity in the credit markets. The announcement from the New York Fed, which carries out monetary policy set by the U.S. Federal Reserve, essentially puts in writing many of the steps the Fed often takes at this time of year.

The Fed said it would inject $8 billion into the banking system on Wednesday. The amount of money is somewhat larger than in past years at this time.

A better-than-expected report on retail sales wasn’t able to hold the market’s early gains. Retail sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago, according to ShopperTrak, which tracks total sales at more than 50,000 U.S. retail outlets. That’s helped ease investor concerns about consumer spending, which accounts for two-thirds of all economic activity.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks slid to close sharply lower as worries about bad home loans, a slumping dollar and oil near $100 a barrel led traders to take money out of the market ahead of the Thanksgiving holiday. The Dow closed at a 7 month low ahead of what for many will be a long holiday weekend.

Stocks rallied, helping recover some of the week’s losses, as investors gobbled up battered financial stocks and indicated hope that retailers fared well on Black Friday. Expectations for this holiday season had been lowered following drops in consumer confidence surveys.

The Dow Jones industrial average closed up 181.84 or 1.42% to 12,980.88, the broader S&P 500 closed up 23.93 or 1.69% to 1,440.70, and the tech-fueled Nasdaq composite closed up 34.45 or 1.34% to 2,596.60. For the week, the Dow lost 1.5%, the S&P 500 declined 1.2% and the Nasdaq slid 1.6%.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners nearly 5 to 1 on volume of 670 million shares. On the Nasdaq, gainers topped losers by a margin of 21 to 6 as 796 million shares changed hands.

Throngs of shoppers descended on stores nationwide on Black Friday which is considered as one of the most important shopping days of the year for the retail sector. This helped investors shelve worries about the strength of consumer spending, which fuels about two-thirds of the economy.

Shares of E*Trade closed up $1.07 or 25.12% to $5.33, on speculation that the struggling online brokerage might negotiate a takeover by chief rivals TD Ameritrade Holding Corp. or Charles Schwab Corp. Speculation started after it said in a regulatory filing that securities backed by home mortgages lost significant value, and it will book larger-than-expected write downs in the fourth quarter.

Stock of GlaxoSmithkline closed up $2.92 or 6.10% to $50.79, on news that its rotavirus drug Rotarix guards against the five most common types of the virus. Rotavirus causes diarrhea in infants and is already under review by the FDA.

Shares of Boeing closed up $2.13 or 2.44% to $89.54, after KLM Royal Dutch Airlines placed an aircraft order with the company worth about $716 million.

Oil prices turned higher after retreating from the $100-a-barrel mark in the morning. U.S. light, sweet crude for December delivery rose 54 cents to $97.83 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks slid to close sharply lower as worries about bad home loans, a slumping dollar and oil near $100 a barrel led traders to take money out of the market ahead of the Thanksgiving holiday. The Dow closed at a 7 month low ahead of what for many will be a long holiday weekend.

The Dow Jones industrial average closed down 211.10 or 1.62% to 12,799.04, the broader S&P 500 closed down 22.93 or 1.59% to 1,416.17, and the tech-fueled Nasdaq composite closed down 34.66 or 1.33% to 2,562.15.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by 23 to 8 on volume of nearly 1.61 billion shares. On the Nasdaq, decliners topped advancers by 5 to 2 as 2.07 billion shares changed hands.

Today’s broad sell off included homebuilders, banks, mortgage lenders and technology shares. It appears as if the weight of the sub prime worries and the credit crunch is coming home to roost. Friday is important for stocks and the economy in that it is Black Friday, the kickoff for the critical holiday shopping season. The sluggish 2008 economic outlook has confirmed other recent signs of a slowdown. Additionally, the Mortgage Banker’s Association reported a 3.6% drop in applications last week, with 47 of the 50 states seeing a drop in existing home sales in the third quarter. There is also some worry that the Federal Reserve is behind in addressing these issues. Policy makers meeting on Dec. 11 are widely expected to cut the fed funds rate by a quarter-percentage point.

In economic news, the October index of Leading Economic Indicators fell 0.5%, after rising 0.1% in the previous month, suggesting that the economic slowdown could accelerate in the months ahead. The November consumer sentiment index from the University of Michigan showed a rise to 76.1 from an initial reading of 75.0, but was down from last month’s 80.9.

Stock of Gap Inc. closed down $1.24 or 6.14% to $18.96, despite stating that third-quarter profit surged 26% as it lowered marketing costs and controlled inventory to offset declining comparable-store sales. It lowered about $75 million in marketing expenses and reduced inventory per square foot.

Shares of Limited Brands Inc. closed up $0.42 or 2.40% to $17.95, after reporting a 48% profit drop and cutting its current quarterly earnings estimate, blaming a challenging retail environment.

Stock of GM closed up $0.10 or 0.38% to $26.39, after reports said that GMAC, its struggling former finance unit, is taking steps to keep its mortgage unit alive.

Shares of Credit Suisse Group closed down $0.82 or 1.43% to $56.59, after Goldman Sachs lowered the bank’s rating to sell from neutral after anticipating less global growth and more skepticism toward the value of its capital-markets businesses.

U.S. light crude oil for January delivery fell 74 cents to settle at $97.29 a barrel on the New York Mercantile Exchange, after having hit a record high of $99.23 in electronic overnight trading. Oil prices got volatile after the release of the weekly oil inventories report, which showed a surprise drop in crude supplies.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

Stocks ended with gains as strength in technology stocks overtook ongoing worries about the financial sector, and minutes from the Federal Reserve’s October meeting did little to change views of another rate cut ahead. Some buyers returned to the market to scoop up troubled financial stocks.

The Dow Jones industrial average closed up 51.70 or 0.40% to 13,010.14, the broader S&P 500 closed up 6.43 or 0.45% to 1,439.70, and the tech-fueled Nasdaq composite closed up 3.43 or 0.13% to 2,596.81.

Market breadth was positive. On the New York Stock Exchange, winners were even with losers on volume of 1.9 billion shares. On the Nasdaq, decliners led advancers three to two on volume of 2.6 billion shares.

Bad news from mortgage backers dragged the mortgage sector - and the broader markets - down. Wall Street is continuing to bet that the central bank will cut rates by at least a quarter-percentage point at the Dec. meeting. But, there may also have been some speculation that the Fed could step in early. In economic news, October housing starts rose more than expected, while permits fell more than expected.

Shares of Freddie Mac closed down $10.76 or 28.69% to $26.74, after reporting a steep quarterly loss and said it had set aside $1.2 billion in the quarter to account for credit losses. The company is looking to raise cash itself after a larger-than-expected loss cut its capital close to the bone.
Stock of Nordstrom Inc. closed up $3.69 or 12.09% to $34.21, after it expanded its share-buyback plan to $2.5 billion and reported a 22% rise in profit.

Shares of Hewlett-Packard closed up $0.12 or 0.24% to $49.56, after reporting quarterly sales and revenue that topped expectations. H-P also said its board approved the buyback of up to $8 billion worth of its common stock. In the fiscal fourth quarter, H-P earned $2.2 billion, compared with $1.7 billion a year ago. Revenue rose 15% to $28.3 billion from last year’s $24.6 billion.

Oil closed at a record high, with January crude surging $3.21 to settle at $98.03 a barrel, surpassing the previous closing record of $96.70 set Nov. 6.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter