Leading the way down are banks. S&P 500 FINANCIALS INDEX is getting punished badly on the sell-off for bank stocks. Just a couple years ago this index was at 500, now is pushing to take out its recent low of 125:
| Value 132.19 | Change -8.21 | % Change -5.8% |
Punishment is being spread around, all the indices I follow are down substantially. Oil now has a 35 handle, hmmm!
The bank story is deteriorating into just a plain UGLY mess! Bank of America is down 25% TODAY to a 17 year low. Besides loan problems, which has become a routine story at big banks, they are trying to back out of taking over Merrill Lynch. They say the losses are too big to deal with but the gov, now a big stockholder, wants the deal to go thru. Remember the former chief exec who was told to take this $150M package & go after they found out he gave them this mess?
•Bank of America Plunges on Concern Company Needs More Aid for Merrill Deal
JPMorgan eaked out a profit in Q4, but the outlook is grim, especially if the economic picture worsens. Earnings were hurt by costs related to the Washington Mutual takeover along with a loan story that was not pretty.
Major foreign banks are not doing any better. It seems like all European & Asian banks are also posting multi $B losses & looking for help to stay afloat. The European Central Bank (ECB) cut rates again, it probably won't make a big difference. Last week the Bank of England cut its lending rate to the lowest rate in history (it was founded in 1694)!
On the macro economic front, jobless claims last week jumped to 524K up from a revised 470K in the prior week. This was substantially higher than the 500K expected. More announcements about layoffs are swelling the rolls.
Congress is proposing a whopper $825B stimulus package (more spending along with tax cuts) to help the economy. Now there is greater recognition that any plan first, has to be passed by congress, no easy task, & 2nd, money has to reach businesses & individuals. Last year serves as a reminder, the tax rebate passed in mid Feb only reached taxpayers 3-5 months later.
•House's Stimulus Bill Seeks $550 Billion in Spending, $275 Billion Tax Cut
Dow is sinking to 8K. That low may be tested, probably today or tomorrow. If it falls the floor, there is not a lot of support below:
Dow Jones Industrials --- 3 months
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