Dow tumbled 198, decliners over advancers almost 7-1 & NAZ fell 52. Bank stocks are the center of attention with the talks going on in Europe & they had a very bad day signalled by a fall of more than 5 in the Financial Index.
The MLP index fell 5 to 370 & the REIT index was down 5+ to 219. Junk bond funds were flattish & Treasuries rose, taking the yield on the benchmark 10 year Treasury back below 2%. Oil fell in sympathy with lower stocks & gold fell to the low end of its trading range in the low 1700s.
DJR Dow Jones Equity REIT Index
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Americans' wealth suffered its biggest quarterly loss last summer in more than 2 years as stocks, pension funds & home values lost value while corps increased their cash stockpiles to record levels. Household net worth fell 4% to $57T in Q3, according to a Federal Reserve report. It was the sharpest drop since the Q3 2008 (the ugly qtr) & was the 2nd straight quarterly decline. The value of stock portfolios fell 5.2% & home values dropped 0.6%. Lower net worth can hurt the economy. When people feel poorer, they spend less which slows growth. Then businesses cut back on hiring & expansion. Corps held a record $2.1T in cash on Sep 30. The S&P 500 index tumbled about 14% in Q3, ending a streak of 4 straight quarterly increases. Roughly half of US households own stocks or stock mutual funds & stock portfolios make up about 15% of household wealth. Most stock wealth is owned by the richest, who also account for a disproportionate amount of consumer spending. 80% percent of stocks belong to the richest 10%. The richest 20% represent about 40% of consumer spending.
Household Net Worth Falls $2.45 Trillion on Stocks, Housing
Photo: Bloomberg
Costco fiscal Q1 profit rose 2.6% as shoppers spent more on gasoline & the company benefited from currency exchange rates. EPS was 73¢, up from 71¢ last year. Earnings adjusted for one-time items matched expections for adjusted earnings of 80¢. Revenue rose 12.5% to $21.2B because of higher gasoline prices & benefits of foreign exchange. COST has performed better than many retailers in the down economy as consumers turned to its wholesale clubs for deals on everyday necessities. COST increased membership fees by 10% last month, the first widespread boost since 2006, after rising costs of commodities narrowed profit margin. The stock fell 1.71 on what are considered mediocre earnings.
Costco Declines After Q1 Profit Margin Narrows
Photo: Bloomberg
Ford declared a nickel quarterly div, its first in 5 years. This comes after Ford earned $1.65B in Q3, its 10th consecutive profitable qtr, & negotiated a new 4-year contract with the UAW covering its 41K US hourly workers. “The board believes it is important to share the benefits of our improved financial performance with our shareholders,” Exec Chairman Bill Ford said. “It is an important sign of our progress in building a profitably growing company and our confidence in the future.” CEO Mulally revived Ford by focusing on quality & fuel economy in new models such as the Fiesta subcompact & Explorer sport-utility vehicle. Ford earned $9.3B in the past 2 years after losing $30B from 2006 -2008 as a collapse in SUV sales was followed by the worst recession since the depression. This is comeback story to be proud of. The stock fell 33¢ in a tough market.
Photo: Bloomberg
EU banks have been told they must raise €115B ($153B) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis. German banks need to raise an additional €13B euros, Italian banks €15B, & Spanish lenders €26B in core tier 1 capital, according to the European Banking Authority (EBS) in London. European leaders are demanding the region’s banks bolster capital to withstand writedowns after they agreed to take losses on Greek bonds. The EBA estimated 2 months ago that the financial institutions needed €106B to increase their core Tier 1 capital to a target of 9% of risk-weighted assets by mid-2012, after marking their sovereign bonds to match market prices. The debt crisis is far from being resolved.
EU Banks Must Raise $153B of Extra Capital: EBA
Photo: Yahoo
Banks just can't buy friends as Jon Corzine is testifying before congress about how little he knows about the MF Global disaster (even though he was captain of the ship!). As ugly as the debt mess is in Europe, & it looks like it is going form bad to worse, this is one more kick in the head that banks (& the stock market) don't need. Dow failed to break thru 12.2K ceiling & closed at the lows just below 12.2K. Santa Claus will not be leading a rally this year.
Dow Jones Industrial Average
S&P 500 Financials Sector Index
| Value | 172.10 | |
| Change | -6.63 (-3.7%) |
The MLP index fell 5 to 370 & the REIT index was down 5+ to 219. Junk bond funds were flattish & Treasuries rose, taking the yield on the benchmark 10 year Treasury back below 2%. Oil fell in sympathy with lower stocks & gold fell to the low end of its trading range in the low 1700s.
AMZ Alerian MLP Index
DJR Dow Jones Equity REIT Index
Click below for the latest market update:
Treasury yields:
U.S. 3-month | 0.005% | |
U.S. 2-year | 0.218% | |
U.S. 10-year | 1.969% |
| CLF12.NYM | ...Crude Oil Jan 12 | ...98.33 | ... 2.16 | (2.2%) |
Americans' wealth suffered its biggest quarterly loss last summer in more than 2 years as stocks, pension funds & home values lost value while corps increased their cash stockpiles to record levels. Household net worth fell 4% to $57T in Q3, according to a Federal Reserve report. It was the sharpest drop since the Q3 2008 (the ugly qtr) & was the 2nd straight quarterly decline. The value of stock portfolios fell 5.2% & home values dropped 0.6%. Lower net worth can hurt the economy. When people feel poorer, they spend less which slows growth. Then businesses cut back on hiring & expansion. Corps held a record $2.1T in cash on Sep 30. The S&P 500 index tumbled about 14% in Q3, ending a streak of 4 straight quarterly increases. Roughly half of US households own stocks or stock mutual funds & stock portfolios make up about 15% of household wealth. Most stock wealth is owned by the richest, who also account for a disproportionate amount of consumer spending. 80% percent of stocks belong to the richest 10%. The richest 20% represent about 40% of consumer spending.
Household Net Worth Falls $2.45 Trillion on Stocks, Housing
Costco fiscal Q1 profit rose 2.6% as shoppers spent more on gasoline & the company benefited from currency exchange rates. EPS was 73¢, up from 71¢ last year. Earnings adjusted for one-time items matched expections for adjusted earnings of 80¢. Revenue rose 12.5% to $21.2B because of higher gasoline prices & benefits of foreign exchange. COST has performed better than many retailers in the down economy as consumers turned to its wholesale clubs for deals on everyday necessities. COST increased membership fees by 10% last month, the first widespread boost since 2006, after rising costs of commodities narrowed profit margin. The stock fell 1.71 on what are considered mediocre earnings.
Costco Declines After Q1 Profit Margin Narrows
COST Costco Wholesale
Ford declared a nickel quarterly div, its first in 5 years. This comes after Ford earned $1.65B in Q3, its 10th consecutive profitable qtr, & negotiated a new 4-year contract with the UAW covering its 41K US hourly workers. “The board believes it is important to share the benefits of our improved financial performance with our shareholders,” Exec Chairman Bill Ford said. “It is an important sign of our progress in building a profitably growing company and our confidence in the future.” CEO Mulally revived Ford by focusing on quality & fuel economy in new models such as the Fiesta subcompact & Explorer sport-utility vehicle. Ford earned $9.3B in the past 2 years after losing $30B from 2006 -2008 as a collapse in SUV sales was followed by the worst recession since the depression. This is comeback story to be proud of. The stock fell 33¢ in a tough market.
F Ford Motor
EU banks have been told they must raise €115B ($153B) in fresh capital as part of measures introduced to respond to the euro area’s sovereign-debt crisis. German banks need to raise an additional €13B euros, Italian banks €15B, & Spanish lenders €26B in core tier 1 capital, according to the European Banking Authority (EBS) in London. European leaders are demanding the region’s banks bolster capital to withstand writedowns after they agreed to take losses on Greek bonds. The EBA estimated 2 months ago that the financial institutions needed €106B to increase their core Tier 1 capital to a target of 9% of risk-weighted assets by mid-2012, after marking their sovereign bonds to match market prices. The debt crisis is far from being resolved.
EU Banks Must Raise $153B of Extra Capital: EBA
Photo: Yahoo
Banks just can't buy friends as Jon Corzine is testifying before congress about how little he knows about the MF Global disaster (even though he was captain of the ship!). As ugly as the debt mess is in Europe, & it looks like it is going form bad to worse, this is one more kick in the head that banks (& the stock market) don't need. Dow failed to break thru 12.2K ceiling & closed at the lows just below 12.2K. Santa Claus will not be leading a rally this year.
Dow Jones Industrial Average
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