Markets decline on a variety of news stories. Dow & S&P 500 are down slightly but decliners lead advancers almost 3-2 & NAZ is down 17. Gloomy reports by Texas Instruments, Apple & to some extent American Express (each is getting clobbered today) are weighing on NAZ. Oil tumbled 4 to 127, as Dolly may not cause supply problems. The Alerian MLP index pulled back 1 after yesterday's strong gain. REITs are doing well today.
Caterpillar (CAT), a Dow stock, reported excellent earnings, stock up 1.85. Sales & earnings were ahead of last year & easily beat forecasts. They pointed out that the US market is depressed, there is a softening in Europe & Japan while business in emerging economies is very strong, a common theme among multi-nationals. DuPont (DD), another Dow company, reported excellent sales & earnings, stock up 1.21. However, they did say they face a "challenging environment." Wachovia (WB) reported an ugly loss requiring a cut in the div to a token 5¢. They are being dragged down by the unfortunate acquisition last year of a Cal mortgage company just before the mortgage collapse plus general tough sledding for banks. Analysts had been forecasting ugly numbers so the stock is only down 25¢. After the strong rebound for bank stocks, reality is sinking in causing a pull-back. For example, Bank of Americas (BAC) after rising 12½ in 3 days lost 30% in the last 24 hours.
Sec Paulson asked again for congress to reform the rules for GSEs (FNM & FRE). Unfortunately he said help could cost tax payers as much as $25B. Ugh!! Their problems spread around the world. It is estimated that foreigners own 1½T (that's T as in trillion) of their borrowings, with China & Japan accounting for 40%. They are waking up to reality that instead of holding AAA bonds, they are only junk type of bonds with vague gov promises for guarantees. Hopefully they will remain calm & tough out this uncertain period.
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