Stagflation worries sank stocks. Dow was down 108, decliners ahead of advancers 3-2 & NAZ was down 17 on just 1.1B volume. The ugly word, Stagflation, is back. That refers to a time 30 years ago when the US economy had high unemployment, high inflation & no growth. Times are a lot less ugly today, but the word is being used a lot. Banks were especially weak on an ugly forecast from Goldman Sachs. It talks about a rebound coming early next year & the need for banks to raise $65B more in capital. Raising capital is associated with div cuts, tough to hold divs flat when asking others to invest. Oil had a relatively good day for the stock market, pulling back only 60¢ in an unusually quiet day of trading. Energy shares had a great day, as investors saw them as a good place to park money. The Alerian MLP index rose a point to 292, the 290 as the support level continues to hold.
Dow is trading at the low end of the 12K range & may be testing to see if the floor can hold. Banks are getting hammered & more selling may be ahead. The Dow has Bank of America (BAC), JP Morgan (JPM), Citigroup (C), plus related financials, American Intl Group (AIG) & American Express (AXP) which are feeling the selling pressure.
2 comments:
I was a muni salesman back then, and you wouldn't give bonds away. Let's hope it's not, but it is a possibility.
Mike,
More banks are cutting divs, Key a couple of days ago & Fifth Third today. These are getting to be uh-oh times for banks, not good!
Avi
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