Wednesday, June 18, 2008

Stocks tumble on gloomy news

Stocks tumbled on gloomy news. Where to begin? Dow fell 100 & nearing the important 12K support line, decliners ahead of advancers 3-1 & NAZ down 24. Morgan Stanley, (MS), reported lower earnings but beat lowered estimates. The stock was down 2.05 on negative expectations going forward. FedEx (FDX) reported a 4th qtr loss and sharply trimmed the estimate for next year sending the stock down 2.35. This is more troubling to me as they feel the pulse of the US economy & the a lessor extent the global economy. Oil is up pennies ahead of today's inventory report. Who knows what it will say or how the market will respond?

Banks are setting new multi year lows as shown for BAC & USB on the right. Div cuts are becoming more common for banks. Comerica (CMA), a member of the S&P 500 Div Aristocrat list, is down 2.39 ahead of their earnings announcement tomorrow. Key Bank (KEY), another member of the S&P 500 Div Aristocrat list, cut their div a couple of days ago & Fifth Third (FITB), down 2, cut today. When banks seek outside capital, new investors expect/demand div cuts. Sick banks are tough for stocks, looks like banks will lead Dow below 12K.

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