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gain in inventories means NOBODY IS BUYING. This is NOT a good thing!
Definately something to watch, after the dot.com bust there was spare inventory of chips, boards, parts, and network equipment in a lot of different places. A lot of it sat so long the holders had to write it off or sell it at a high discount (most people don't want last year's electronics). Took about two years to clear everything out.gain in inventories means NOBODY IS BUYING. This is NOT a good thing!
gain in inventories means NOBODY IS BUYING. This is NOT a good thing!
I hope the S&P drops to that mark or lower. I want a decent point to buy in. Been on the sidelines too long! DAMN IFT LIMITATIONS!
Money back guarantee?
SEC Rule Change Sparks Selloff
By Mark Glassman
May 7, 2008
News at a Glance
Mandating Honesty: New SEC reg to force disclosure of more losses.
Stocks Plummet: Financials weigh down major indexes.
Oil Keeps Climbing: Crude rises on rise gas demand.
Picket Fence Redux: Pending Home Sales Index dips again.
The Lowdown
Greater transparency is generally a good thing, but it may take some getting used to. Call today's session an adjustment period.
Stocks plummeted Wednesday as traders bristled at new federal regulations that could force the nation's financial institutions to draw back the curtain a bit further on their books. The Dow Jones Industrial Average lost 206 points at 12814. The Nasdaq gave back 45 at 2438, and the S&P 500 had dropped 26 to 1393.
Financials led the decline, as Citigroup (C1), JPMorgan Chase (JPM2), Bank of America (BAC3) and Wachovia (WAC4) each posted losses of more than 3% on the day. Insurers, brokerages and home lenders were also hurt.
Traders recoiled after The Securities and Exchange Commission said5 it would require financial institutions to unveil their capital and liquitiy levels. "One of the lessons learned from the Bear Stearns experience is that in a crisis of confidence, there is great need for reliable, current information about capital and liquidity," SEC Chairman Christopher Cox said, Bloomberg reported6. "Making that information public can certainly help."
In the short term, it hurt. Traders grew particularly nervous over Cox's remark that the government would "phase in additional disclosure related to concentration of exposures." That could leave valuations of banks looking a lot worse.
The mood was also weighed down by oil futures. An Energy Department report showed gasoline demand was on the rise. By 4:11 p.m., crude traded up $1.96 on the day at $123.80 a barrel. The higher prices could take a toll on businesses and consumers who are already struggling to fuel their cars and trucks.
In housing, the Pending Home Sales Index slipped in March but was consistent with economists' estimates. "Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas," said Lawrence Yun, the chief economist at the National Association of Realtors, which runs the index. "As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half."
On Tuesday, corporate results from Fannie Mae (FNM7) and D.R. Horton (DHI8) suggested home lending and construction remained under heavy pressure.
In Washington, the House of Representative was set to debate the merits of a new housing bill that would expand the powers of the Federal Housing Administration, allowing it to insure up to $300 billion in new mortgages over four years. President Bush said he would veto the bill, Dow Jones Newswires reported9.
The labor market also gave traders pause. Non-farm productivity rose by more than economists had predicted in the first quarter. However, the data offered a mixed prognosis for the economy. Output increased during the quarter, but labor hours dropped 1.8%, the steepest fall in the last five years. At the same time, labor costs moved higher.
The session began more optimisticly after solid earnings from the media and tech sectors. Cisco Systems and Disney, which wield influence on the Nasdaq Composite and the Dow, respectively, each beat the Street during their most recent quarters and offered support to the new axiom that international sales are critical in compensating for the struggling U.S. economy.
Corporate News
Sprint Nextel (S10) and Clearwire (CLWR11) will merge their wireless broadband divisions to create a new company called Clearwire, the firms said12. The new firm plans to launch the nation's first WiMAX network by the end of 2010. Sprint will own 51% of the new firm. A consortium of investors, including Google (GOOG13), Intel (INTC14), Comcast (CMCSA15), Time Warner (TWC16) and Bright House Networks, will own a 22% stake. The remaining 27% will be owned by current Clearwire shareholders.
Cisco Systems (CSCO17) posted a smaller-than-expected dip in fiscal third-quarter net income, lifting shares. The firm earned18 $1.77 billion, or 29 cents a share, down from $1.87 billion, or 30 cents a share, in the year-ago period. That was good enough to top analysts' estimates by two pennies a share. Cisco posted a surprising 10.4% rise in sales as the continued expansion of the Internet into developing nations helped offset softness at home.
Disney (DIS19) reported a 22% increase in fiscal second-quarter profit. The media conglomerate earned20 $1.1 billion, or 58 cents a share, up from $931 million, or 44 cents a share, in the year-ago period. Wall Street had been looking for 51 cents a share. Sales rose 10% to $8.7 billion. Disney said it held up during the three-month writers strike by leveraging some of its television shows abroad. The firm also said the recent decline in the dollar helped lure more tourists to its American theme parks.
The Economy
Non-farm productivity rose 2.2% in the first quarter, up from from a revised fourth-quarter decrease of 1.6%, according to preliminary data released by the Labor Department. Economists had been looking for a 1.5% first-quarter increase. REPORT21
The Pending Home Sales Index, a leading indicator for the housing market, slipped 1.0% in March, compared to a revised 2.8% decline in February, the National Association of Realtors said. The March decline was in line with economists' expectations. REPORT22
Crude inventories climbed by 5.7 million barrels last week, putting them back in the middle of the average range for this point in the year, the Energy Department said. REPORT23
Consumer borrowing jumped by $15.2 billion in March, accelerating from a revised $6.5 billion increase in February, the Federal Reserve said. The gains were driven in part by an increase in non-revolving credit from commercial banks and financial firms. Economists had expected borrowing to rise by $6.0 billion. REPORT24
ReadMe
The New York Times on gas prices: The Energy Department predicts the cost of gasoline will peak next month at $3.73 a gallon. STORY25
Forbes on the energy sector: Tuesday's session demonstrated how the performance of solar stocks is influenced by oil futures. STORY26
The Wall Street Journal on retail: Thursday's retail data may show a jump in sales, but those numbers could mask the heavy discounting that pulled shoppers into stores and threatened earnings. STORY27
