World markets sink but Dow is steady

Asian markets had another awful day. Their last 2 days of trading was probably the worst 2 day period ever. In the overnight, Tokyo, the largest market, dropped to yet another low. The ¥ rose to new heights at 93 to the dollar. Just a couple of months ago, it was down at 110. Their economy relies on exports, the strong ¥ makes their products harder to sell in a world economy that is sputtering. The Australian market sank again to another 4 year low. This message was repeated in about every Asian market.

• World markets slump; Nikkei at 26-year low- AP

However, one gained:

Seoul Composite

.....946.45

.... 7.70 ..up 0.8%

The Korean central bank reduced the lending rate by 75 basis points, helping the banking sector. European markets continued the worldwide stock market slide.

However, the US markets managed to digest this ugly news fairly well. The Dow dropped 150 at the opening, but recovered to around break even. The decliners are ahead of advancers 2-1 & NAZ dropped 14. S&P 500 FINANCIALS INDEX is essentially even, the Alerian MP index is down 3 while the Dow Jones REIT index tried to recover from new last week's low levels but slipped back to only break even. Oil dropped 1 after the production cut announced last weak was seen as less important than demand destruction.

• Oil falls below $63 as investors eye weak demand- AP

The $700B rescue package is working its way into the financials, banks are jumping on the band wagon. Insurance companies are looking for similar investments to help them. Plus additional companies, i.e. autos, now also see the gov as a lender/investor of last resort.

•Capital One, KeyCorp Among 12 Banks Receiving $28 Billion in U.S. Funding


The Commerce Dept announced sales of new homes rose 2.7% in Sep to an annual rate of 464K. Expectations were that sales would drop from the prior month. However, sales were still one-third below prior year's levels. These figures may be largely pre Sep 15 when the bailout package was in national headlines. Many businesses in the US reported that business dropped off a cliff following the negative headlines.

• New home sales rise 2.7 percent, prices at 4-year low- AP

There was some good news. Verizon, a Dow stock, had a favorable earnings report sending its stock up 10% (from depressed levels). They gave guidance for EPS to grow 8% this year which implies Q4 will be a little short of expectations by analysts. But they continue to invest for growth in the future.

• Verizon 3Q earnings up 31 percent- AP

Of the 20 most popular stocks at Charles Schwab, all are lower YTD with 13 down at least 30% each. As started in Korea, this week is expected to be a week of interest rate cuts around the world to help banks. The Federal Reserve is expected to cut 50, maybe 75, basis points. But the FED is running out of room for further rate cuts, negative rates just doesn't seem in the cards.