Wachovia's (WB) loss sent stocks modestly lower. Dow & NAZ pulled back a little, but decliners outnumbered advancers 3-2. Once again, volume was light coming in under 1.2B, lowest this year. Banks & related stocks (i.e. home building, REITs, etc.) took a beating from the Wachovia news. Fifth Third Bank (FITB) was down 1.84 to 19.02, lowest price in 10 years implying a yield of almost 9%. That yield includes a significant risk factor. The silver lining for WB is they are getting $7B financing from traditional sources as opposed to going overseas for foreign investment. On the bright side, MLPs had an up day. The Alerian MLP index was up 1.20 to 283, not bad. This was a day when boring pipelines with nice yields looked good. Last week, junk bonds rallied a little. Even today, they offer yields triple the 3½% available on Treasuries.
Goldman Sachs said Q1 earnings got off to an awful start. Fair assessment. Prepare for more ugly news.
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