advertisement
Article Tools
| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
A three-day rally for stocks abruptly halted today as worries grew about financial stocks and a downgrade of Intel (INTC, news, msgs) hurt technology stocks.
At the same, worries about the economy grew as crude oil jumped over $95 a barrel for the first time since early January.
The Dow Jones industrials finished down 175 points, or 1.4%, to 12,377. The Standard & Poor's 500 Index fell 18 points, or 1.4%, to 1,349, and the Nasdaq Composite Index was off 41 points, or 1.7%, to 2,333.
It was the Dow's 11th loss of 100 points or more in 30 trading sessions in 2008. The blue-chip index is down 6.7% for the year.
The ostensible reason for the sell-off was Federal Reserve Chairman Ben Bernanke's comments to the Senate Banking Committee that the economy faced considerable downside pressures from the housing slump, softening labor markets and a credit crunch that simply won't let up. Plus, he said he believed big banks and investment banks will face more write-offs.
He added that the government's stimulus package and lower rates will get the economy moving by the middle of the year. Most Fed watchers saw his comments as a signal the central bank will cut its key federal funds rate to 2.75% or possibly 2.5% at its March 18 meeting. The rate, which banks charge each other for overnight loans, is 3% now.
Only one of the 30 Dow stocks showed gains today: ExxonMobil (XOM, news, msgs), up 6 cents to $85.55. Only 56 S&P 500 stocks were ahead on the day, along with just 11 Nasdaq-100 ($NDX.X) stocks. The Nasdaq-100, which tracks the biggest Nasdaq stocks, was off 35 points, or 1.9%, to just under 1,788.
Exxon and other energy stocks were all higher today as crude oil moved higher. Crude in New York was at $94.58 a barrel, up $1.31 from Wednesday at 1:55 p.m.
The Amex Oil Index ($XOI.X) was up 0.3% at 1,382. The index is up 4% this week although down 11% on the year.
One can't blame the sell-off on Bernanke. There were other issues at work. Here's a rundown.
Intel's fall hit techs
Intel was the biggest loser among the 30 Dow stocks, falling 3.5% to $20.46 after Goldman Sachs removed the stock from its "Committed Buy" list.The downgrade hit chip stocks and spread throughout technology.
Dell Inc. (DELL, news, msgs) fell 2.5% to $19.81. Apple (AAPL, news, msgs) fell 1.5% $127.46. Hewlett-Packard (HPQ, news, msgs) was off 1.8% to $43.26. Cisco Systems (CSCO, news, msgs) was off 2.2% to $23.53.
A bond insurer is downgraded
FGIC Corp., the bond insurer owned by private-equity firm Blackstone (BX, news, msgs) and PMI Group, lost its Aaa insurance rating at Moody's Investors Service. The company failed to raise enough capital to compensate for losses on subprime mortgage guarantees. Moody's said FGIC needs about $4 billion more in new capital to maintain a Aaa rating. Aaa is Moody's highest rating. AAA is the highest rating used by rival Standard & Poor's Corp.But rivals Ambac Financial (ABK, news, msgs) and MBIA (MBI, news, msgs) moved up 14% to $10.71 and 10% to $12.80, respectively, because Moody's found their financial health to be better. But formal reviews of both companies are still under way, "and we wanted to give the market a sense of their relative positioning," Jack Dorer, a Moody's managing director and an author of the report, told Bloomberg News.
Blackstone, however, fell 4.5% to $16.83. Since the company went public last year, its units have fallen nearly 54% in value. (The company is organized as a master-limited partnership.)
UBS leads financial stocks lower
UBS AG (UBS, news, msgs), the biggest Swiss investment bank, reported it still has significant exposure to the troubled U.S. mortgage market, raising fears of further losses as it confirmed $13.7 billion in write-downs.UBS shares fell about 8.3% to $33.94 in New York.
UBS's problems, combined with cut in earnings estimates for major brokers by Keefe Bruyette & Woods, battered financial stocks generally.
Goldman Sachs (GS, news, msgs) fell 2% to $176.67. Lehman Bros. (LEH, news, msgs) fell 1.7% to $54.39. Bear Stearns (BSC, news, msgs) slumped 2.6% to $78.47. Merrill Lynch (MER, news, msgs) dropped 2.7% to $50.79. And Morgan Stanley (MS, news, msgs) fell 1.4% to $42.62. JPMorgan Chase (JPM, news, msgs) was off 3.4% to $42.61.
The Standard & Poor's Banking Index($BIX.X) was down 2.4% to 262. The Amex Securities Broker/Dealer Index ($XBD.X) fell 1.8% to 191.
Liz Claiborne's forecast clobbers retail stocks
Retail shares tumbled after Liz Claiborne (LIZ, news, msgs) said it expects a fourth-quarter loss of 90 cents to $1, or a profit of 15 cents to 25 cents excluding reorganization and other costs. Liz Claiborne shares fell 18% to $18.31 and were the worst performer among S&P 500 stocks.Analysts polled by Thomson Financial had expected a profit of 63 cents per share. Sales fell 3% to $1.21 billion, while analysts had expected revenue of $1.22 billion.
The Standard & Poor's Retail Index ($RLX.X) fell 2.8% to 395. It's off 6.7% this month. Wal-Mart Stores (WMT, news, msgs) was off 1.4% to $49.97. JCPenney (JCP, news, msgs) fell 4.1% to $45.90.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $95.46 | $93.27 | $2.19 | 4.04% | -0.54% |
| Heating oil (per gallon) | $2.6666 | $2.6156 | $0.0510 | 5.21% | 0.65% |
| Natural gas (per million BTU) | $8.7720 | $8.3880 | $0.3840 | 8.65% | 17.23% |
| Unleaded gasoline (per gallon) | $2.4761 | $2.3899 | $0.0862 | 7.23% | -0.59% |
Buffett's new stakes
Berkshire Hathaway (BRK.A, news, msgs), the company run by billionaire Warren Buffett, disclosed stakes in Kraft Foods (KFT, news, msgs) and drug maker GlaxoSmithKline (GSK, news, msgs).Berkshire had 132.4 million shares of Kraft, the world's second-largest foodmaker, as of Dec. 31, Berkshire Hathaway said in a regulatory filing today. Buffett also increased Berkshire's stake in Wells Fargo (WFC, news, msgs), the nation's second-largest home lender, to 289.3 million shares.
Kraft, spun off by tobacco giant Altria (MO, news, msgs) last year, had fallen 0.9% to 29.31 in regular New York Stock Exchange trading but jumped 3.1% to $30.23 in after-hours trading. GlaxoSmithKline was off 0.8% to $43.32 in regular NYSE trading but up 1.6% to $44.02 in after-hours trading.
Wells Fargo had fallen 2.9% to $29.59 in regular trading but rose 0.5% to $29.75 in after-hours trading.
Bernanke's worries
In testimony before the Senate Banking Committee, Bernanke was blunt about the issues: "Downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further."Of particular concern, he said, was "the unexpected losses and the increased pressure on their balance sheets have prompted banks to become protective of their liquidity and balance sheet capacity and, thus, to become less willing to provide funding to other market participants, including other banks."
He did say, however, that inflation pressures, while growing, aren't out of control, and there are two forces that could mitigate the softening of the domestic economy: exports and the recently approved fiscal package. Their effects will be felt most strongly in the second half of the year.
Treasury Secretary Hank Paulson also testified this morning. "I believe that our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years," Paulson said.
More from MSN Money
Subprime slams UBS
The fourth-quarter loss that Swiss banking giant UBS reported today was just plain big and shows how pernicious the U.S. subprime-mortgage mess is.The company said it lost $11.3 billion in the quarter, in line with analysts' expectations. UBS wrote down $10.8 billion in losses on subprime mortgages in the quarter. The bank said $2 billion in losses was related to Alt-A mortgages, which are a step up from subprime but not prime, and another $871 million related to the bond insurers.
Losses on subprime-backed mortgages have forced the bank to write down a total of $18.4 billion since the mortgage mess began.
For all of 2007, UBS lost a whopping $3.97 billion. UBS reported a profit of about $11.1 billion in 2006.
With today's 8.3% loss, the stock has fallen nearly 49% since peaking on April 26, 2007.
"Last year was one of the most difficult in our history," Chief Executive Officer Marcel Rohner said in a statement. "While most of our businesses continued to be very profitable, the sudden and serious deterioration in the U.S. housing market, in combination with our large exposure in subprime mortgage-related securities and derivatives, has driven us into (a) loss for the year."
And Rohner said 2008 would continue to be difficult for the company.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 2.220% | 2.210% | 0.010 | 18.72% | -29.30% |
| 5-year Treasury note yield | 2.770% | 2.692% | 0.078 | -1.98% | -19.83% |
| 10-year Treasury note yield | 3.818% | 3.694% | 0.124 | 4.92% | -5.38% |
| 30-year Treasury bond yield | 4.653% | 4.512% | 0.141 | 6.87% | 4.35% |
| Currencies | |||||
| U.S. Dollar Index | 76.240 | 76.530 | -0.290 | 1.27% | -0.59% |
| British pound in dollars | $1.9697 | $1.9631 | 0.0066 | -1.10% | -0.98% |
| Dollar in British pounds | £0.5077 | £0.5094 | -0.0017 | 1.12% | 0.99% |
| Euro in dollars | 1.4654 | 1.4577 | 0.0077 | -1.45% | 0.26% |
| Dollar in euros | € 0.6824 | € 0.6860 | -0.0036 | 1.47% | -0.26% |
| Dollar in yen | ¥107.82 | ¥108.13 | -0.31 | 1.33% | -3.60% |
| U.S. dollar in Canadian dollars | $1.001 | $0.997 | -$0.0023 | 0.12% | 0.79% |
| Canadian dollar in U.S. dollars | $0.999 | $1.003 | $0.0023 | -0.18% | -0.85% |
| Commodities | |||||
| Gold | $910.80 | $910.20 | $0.60 | -1.25% | 8.69% |
| Copper | $3.5005 | $3.5435 | -$0.04 | -1.10% | 15.11% |
| Silver | $17.2250 | $17.3530 | -$0.13 | 0.67% | 15.45% |
| Crude oil (NYMEX) (per barrel) | $95.46 | $93.27 | $2.19 | 4.02% | -0.54% |
By Charley Blaine and Elizabeth Strott, MSN Money
Rate this Article
High