VerySmartInvesting: Dow sinks to another new low

Thursday, March 5, 2009

Dow sinks to another new low

What is given with one hand is taken with the other. Yesterday's gains, which was already cut in half during the last hour of trading, has been lost. Dow is down 205 to yet another new low, decliners over advancers 7-1 & NAZ dropped 37.

Banks can't find friends as S&P 500 FINANCIALS INDEX sinks to another low, the ultimate support is zero. Citigroup (C), still in the Dow, may fall below $1. At that point it would face delisting, rather embarrassing for a Dow stock. Berkshire Hathaway (BRK.A) is down 5% today. They are the premier financial company but their chart doesn't look pretty.

Value
87.16

Change
-7.44

% Change
-8.1%

Berkshire Hathaway --- 1 decade

The Alerian MLP Index & Dow Jones REIT Index are each down 5. The former is back under water YTD. Junk bonds are weak & VIX is flat. Oil is down 87¢ in this bleak market environment.

The number of new claims for unemployment benefits dropped to 639K from 670K in the prior week (a 26 year record high number). The 4 week average, which is less volatile, is 642K, another dreary number. By way of comparison, 400K had been considered worrisome as it signaled recessionary conditions.

Fewer people file for unemployment benefits- AP

China, the 4th largest economy in the world & fastest growing, forecasted 8% growth for 2009. For China this is a modest number. Some analysts are forecasting a slower growth rate. There was no mention of additional stimulus to the $586B package already announced. Shanghai market was up 1% (& up sharply from it's depressed lows late last year) while Hong Kong fell 1% yesterday

China says 8 percent growth possible in 2009- AP

Wal-Mart (WMT), Dow stock & Dividend Aristocrat, had good customer traffic in Feb. Same store sales were up 5.1%, ahead of their guidance (1-3% increase during this qtr). Customers are less concerned with the price of gas since it has come down, instead more worried about losing jobs. Sales were strong for groceries & electronics, reflecting more people are staying at home. WMT increased their div 15% to a 1.09 annual rate. Dividend Aristocrats which are financially strong will continue raising their divs.

•Wal-Mart Customers Increase Shopping Trips; Annual Dividend Is Raised 15%

Goldman Sachs has lowered their outlook for 2009. They predict the world economy will shrink by 0.6% vs 0.2% previously predicted as they see economic conditions getting progressively worse. This is considered the worst recession since WWII. The European Central Bank & Bank of England cut rates today, trying to fight the financial meltdown. The record low interest rate at the Bank of England is especially significant, since the bank was founded in 1694.

•Goldman Predicts Deeper Global Recession, Forecasts Economy to Shrink 0.6%