Federal Reserve announcement leads to gloom

The Federal Reserve announcement yesterday trying to prop up Fannie Mae (FNM) & Freddie Mac (FRE) led to gloom in the markets. In pre-trading the Dow was up 150 based on seat of the pants enthusiasm but fell to a small gain at the open & has been selling off since then (check the chart below courtesy of Bloomberg): It's showing down 51, decliners ahead of advancers 2-1 & NAZ is down 26. S&P 500, down 11 to 1228, is in scary territory for technicians.





FRE saw strong demand this morning selling $3B in bills, an encouraging sign. But this is a very gloomy time for the GSEs, not to mention for many others. Banks are getting hammered again. There are a bunch (WM, NCC, FHN), used to be nice div guys, are now selling around 3, 4, 5, whatever. Last year, collecting their dividends was considered routine. Also the FED & banks have to clean up bleeding from the IndyMAc failure on Fri. The credit crisis has become an ugly mess that is not going away quickly no matter what the FED or gov does.

Back to the rest of the world. Oil is kicking around 145 up about 50¢ for the usual assortment of reasons (strong dollar & supply uncertainties). AAA reported gas averaged 4.11 yesterday. High priced gas is going to hurt retailers as the important back to school selling mini-season approaches. Hang on for another rough day in the markets.