Another depressing day for stock markets

After dropping 200 early in the first hour of trading, Dow tried & tried to break into the green but couldn't make it stick. For much of the day, it stayed near the flat line with sellers returning in the last ½ hour taking the Dow down to close with a 223 loss (near its lows), decliners over advancers more than 3-1 & NAZ sold off 35 taking it below 1500. On NYSE floor, volume was nothing exceptional at only 1.3B.

S&P 500 FINANCIALS INDEX dropped 11 to 159, another multi year low. At the famous July 15 low, Bank of America (BAC) dropped to 18 with an eye popping yield of 14+%. Now it's down to 15 after the div has been halved. Investors are betting more ugly news is coming for that div even though BAC started the year as an S&P 500 Dividend Aristocrat. The Alerian MLP Index dropped 6½ to 188, breaking out on the downside of its recent sideways trading zone. The Dow Jones REIT Index dropped to 125½, another multi year low. All REITs are being punished badly. Simon Property (SPG), one of the premier REITs, at 48.88 is at a 5 year low & yields 7½%, others of lessor quality have yields well into double digits. However, the VIX shot up 2.85 to 69.15, fear is on the rise.

Similar to the stock markets, oil tried to post a gain but couldn't make that hold.

CLZ08.NYM

...Crude Oil Dec 08

....55.00

.... 2.04 (3.6%)

50 professional forecasters gave their forecast for the economy & it is pretty gloomy. Q4 is shaping up as negative which will define a recession. They are forecasting the economy will contract at a 2.6% annual rate, others say 3-4%. This is down from expectations in the prior month when they said the economy would eak out a gain in Q4, things are worsening at a rapid pace. In the next 12 months, they expect the unemployment rate to shoot up another percentage point to 7½%. The important point may be how quickly they revised their forecasts downward in just the last month. That reminds me of these familiar thoughts about how the economy fell off a cliff on Sep 15.

• Forecasters: tough road ahead for the economy- AP

The PM trading had nothing exceptionally going for it, merely stumbling along so sellers took over at the close. Banks were very weak on all the confusion in financial markets. Sadly there is nothing around to corner to stop the bleeding especially while the fate of 3 major auto companies is up in the air.