Stocks tumble on Dubai debt crisis

Dow recovered to a loss of 130 after a plunge of 200 at the opening, decliners ahead of advancers 5-1 & NAZ dropped 26. Dubai worries dominate thinking. Banks slumped taking the Financial Index to the low end of its current trading range.


S&P 500 FINANCIALS INDEX

Value 194.19

Change -2.98

% Change -1.5%

Like the general market high yielders plunged on the opening, but buying reduced losses. The Alerian MLP Index was down 5, then the loss was cut to only pennies. The REIT index has recovered more than half of its original 4 point drop. Junk bond funds sold off in sympathy with the stock markets fall. The VIX jumped more than 5 on the opening, but that has been reduced to less than 3. Treasuries were in demand. The yield on the 10-year Treasury bond dropped 5 basis points to 3.23%, near its lowest levels in more than 6 months.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index - 6 months





Oil sank to the low end of its recent trading range, but at least that floor held. Gold is down, but starting from almost 1200 gold bugs aren't complaining.

CLF10.NYM

...Crude Oil Jan 10

...75.13

... 2.83 .......(3.6%)

GCZ09.CMX

...Gold Dec 09

...1,172.50

... 14.50 .......(1.2%)

BlackFriday sales result should be dominating stock market worries, but not today. There is plenty of confusion about Dubai & its debts. Stocks sold off badly based on gut reactions. Buyers are returning, narrowing the early AM losses. No point discussing Dubai debt problems since few have any idea what's going on. The articles below give some thoughts.

•Dubai Woes May Escalate to `Major Sovereign Default,' Bank of America Says
•Mobius Sees a `Correction' From Dubai Crisis as Das Predicts Risk Aversion
•Dubai Debt May Exceed $80 Billion on Off-Balance-Sheet Liability, UBS Says



This was supposed to be a quite day of trading with markets closing at 1PM EST. Not today. The worry is that perhaps $80B in Dubai debt could default creating another Lehman kind of disaster. Fears subsided allowing stocks to recover (great opportunity for day traders to buy on the opening & take profits before starting the weekend). If Dubai doesn't blow up, attention will switch back to BlackFrdiay sales & implications for retail sales. By the middle of next week, Nov auto sales will be reported giving a clue about consumer buying habits.

Dow Jones Industrials --- 2 weeks