Dow dropped 241, decliners over advancers 3-1 & NAZ dropped 49. Volume continues quiet, under 0.9B on NYSE. This was a very gloomy day for stocks led by financials:
S&P 500 FINANCIALS INDEX
Value__268.46...Change__(8.63)....% Change__(3.1%)
The financials, compiled for Bloomberg, essentially reached their one month low of 267 (which will drop off the one month grouping tomorrow). Fannie Mae (FNM)/Freddie Mac (FRE) had a good day, rising because they were able to sell more securities. They still are penny stocks selling below 5 (actually - 5.20). Rates on securities they sell keep climbing as buyers price in greater risk.
Bigger news in the financials today was American International Group, (AIG), a Dow stocks, falling 1.09 to a 13 year low!! After $25B in writedowns, they are NOT finished with this mess. It's expected that they will lose money for the 4th straight quarter which will require lower ratings on their securities. Adding insult to injury, they are no longer the largest insurer in North American. The other troubled biggie in the news, Lehman (LEH), may have to go without added financing from the Korean Development Bank, down 96¢.
Oil Rises as Tropical Storm Forms in Caribbean- AP
Ford Shares Fall to 22-Year Low- AP
Oil was up pennies on worries about threats from the tropical storm while Ford fell to a 22 year low. The Alerian MLP index dropped almost 1 to below 267, still hovering near its 52 week low (258) reached a couple of weeks ago.
Markets are clearly on defense & financials look very soggy. Maybe the Federal Reserve will not be able to wait until Friday night to come out with a rescue plan for FNM/FRE.
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