Still Howling. Funny how the neo-cons avoid posts on the economic melton. Lone Wolf wrote: > U.S. Stocks Drop; S&P 500, Dow Post Worst Retreats Since 1937 > > By Elizabeth Stanton and Eric Martin > More Photos/Details > > Oct. 7 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor's > 500 Index below 1,000 for the first time since 2003, on speculation > banks and real-estate companies are running short of money as the > credit crisis worsens. > > Bank of America Corp. tumbled 26 percent after cutting its dividend in > half and saying it plans to sell $10 billion in common stock to brace > for a recession. Morgan Stanley, KeyCorp and JPMorgan Chase & Co. slid > more than 10 percent as investors shrugged off signs the Federal > Reserve will reduce interest rates. General Growth Properties Inc., a > mall owner, plunged 42 percent on concern it won't be able to repay > debt. > > The S&P 500 slid 60.66 points, or 5.7 percent, to 996.23, extending > its 2008 tumble to 32 percent in the market's worst yearly slump since > 1937. The Dow Jones Industrial Average dropped 508.39, or 5.1 percent, > to 9,447.11, giving it a 29 percent retreat in 2008 that would also be > the worst in 71 years. The Nasdaq Composite Index lost 5.8 percent to > 1,754.88. > > ``We've approached the edge of the cliff,'' Leon Cooperman, 65, who > manages $6 billion at hedge fund Omega Advisors Inc., said at the > Value Investing Congress in New York. ``Do we go over the cliff or > begin to recede? History says we recede, but there's no guarantee. > This is the most difficult financial environment I've lived through.'' > > The S&P 500 Financials Index slumped 12 percent to below its lowest > level since 1997 even after Fed Chairman Ben S. Bernanke signaled he > is ready to cut interest rates. The S&P 500's 15 percent retreat since > Sept. 30 is the third-steepest five-day drop on record, according to > Bespoke Investment Group LLC, a Harrison, New York-based research > firm. The bigger slumps occurred in 1932. > > Levkovich Cuts Forecast > > The slump that pushed the S&P 500 to an almost five-year low yesterday > prompted Tobias Levkovich, chief U.S. equity strategist at Citigroup > Inc., to lower his year-end forecast for the index by 19 percent to > 1,200. His previous target of 1,475 had been the most bullish of nine > forecasts in a Bloomberg survey. > > Bank of America plunged $8.45 to $23.77 after the lender slashed its > dividend to 32 cents and announced plans to raise at least $10 billion > in common stock as it braces for an extended recession. Chief > Executive Officer Kenneth Lewis said the U.S. economy slowed in the > past 45 days with little prospect for immediate improvement. > > The bank also released its third-quarter earnings two weeks early. > Profit declined 68 percent to $1.18 billion, or 15 cents a share. > Analysts predicted earnings of 61 cents a share for the quarter, > according to the average of 20 estimates compiled by Bloomberg. > > `Credit Deterioration' > > ``The market is responding to the fact that there was credit > deterioration in their businesses,'' Erick Maronak, the New York- > based chief investment officer at Victory Capital Management, said of > Bank of America. Victory Capital oversees $66 billion. > > Merrill Lynch & Co., which is being acquired by Bank of America, sank > 26 percent to $18 for the steepest decline since October 1987. > JPMorgan lost 11 percent to $39.32, and KeyCorp tumbled 10 percent to > $10.61. > > Morgan Stanley declined as much as 40 percent on concern its sale of a > stake to Japan's Mitsubishi UFJ Financial Group Inc. would fall > through. The stock pared that drop, falling 25 percent to $17.65 at > the close, after Morgan Stanley spokesman Mark Lane said the deal is > still ``on track.'' > > Goldman Sachs Group Inc.'s index of stocks with high hedge fund > ownership dropped 7.1 percent to the lowest level since August 2003. > All 49 companies in the measure declined, giving the index a 38 > percent loss for 2008. > > Disney Declines > > Walt Disney Co. retreated 6 percent to $26.57, the lowest price since > February 2006, after Merrill Lynch downgraded the world's biggest > theme-park operator to ``underperform'' from ``neutral,'' citing > concern ``about the risk to earnings estimates in the current economic > climate.'' > > General Growth Properties Inc. led an index of real-estate investment > trusts in the S&P 500 to a 8.9 percent drop, sending the group to a > four-year low. The mall owner at risk of not being able to refinance > debt coming due this year fell 42 percent to $4.50, extending its > slide over the past year to 92 percent. > > Apartment Investment & Management Co., a REIT specializing in > apartments, fell 27 percent to $25.50. > > Tomorrow is the last day of a Securities and Exchange Commission rule > banning short sales in more than 980 financial companies. Since it was > announced Sept. 18, companies covered by the rule are down an average > of 16 percent, according to data compiled by Bloomberg. The S&P 500 > lost 17 percent during the period, while commercial banks in the gauge > are down 23 percent. > > GM, Ford Slump > > General Motors Corp. fell 11 percent to $7.56, the lowest price since > the 1950s. The automaker's European unit plans to reduce production by > about 40,000 vehicles by the end of the year as credit-market turmoil > causes a drop in car sales. > > Ford Motor Co., the second-largest U.S. automaker after GM, tumbled 21 > percent to $2.92, the lowest price since April 1983. > > Advanced Micro Devices Inc., the chipmaker struggling to compete with > Intel Corp., jumped 8.5 percent to $4.59 after saying Abu Dhabi will > pay $700 million for a stake in a new company that will own two plants > in Germany and build another in New York. The new company, which will > assume $1.2 billion of AMD's debt, will receive as much as $6 billion > from Abu Dhabi to expand the factories and get $1.4 billion in > operating capital. Abu Dhabi will also pay $314 million to double its > stake in AMD to 19 percent. > > Commercial Paper Fund > > Stocks opened higher after the Federal Reserve invoked emergency > powers to create a special fund to buy commercial paper, which is > short-term debt issued by corporations to fund operations. > > American Express Co., the largest U.S. credit-card company by > purchases, dropped 6.1 percent to $28.25. It had surged as much as 8.1 > percent after the Fed's announcement. General Electric Co., whose > businesses include jet engines, health care and television > programming, added as much as 5.9 percent before closing down 5.1 > percent at $20.30. > > Both American Express and GE are among the biggest U.S. direct issuers > of commercial paper. In the three weeks ended Oct. 1, finance-company > commercial paper outstanding fell 16 percent to $683.4 billion, Fed > data show. > > ``A connection is being made between the freeze-up in the credit > markets and the drop-off in economic activity we've seen,'' said > Robert Stimpson, a money manager at Oak Associates Inc. in Akron, > Ohio. ``A step to loosen credit practices and allow companies to > borrow again might forestall the economic weakness we've seen flow > through'' to employment. > > Earnings Watch > > Earnings at S&P 500 companies probably dropped on average of 5.6 > percent in the third quarter, according to analysts' estimates > compiled by Bloomberg. > > Financial companies are forecast to lead the drop in profits with a 64 > percent decrease, followed by an 11 percent slide in earnings at > retailers, hoteliers, restaurant chains and other so- called consumer > discretionary companies. > > The S&P 500 has tumbled 36 percent from its record a year ago. Based > on estimated profit, the S&P 500's price-to-earnings ratio is 11.9. > > ``On very conservative earnings expectations for the next 12 months > this market at minimum is starting to look reasonably valued,'' Leo > Grohowski, chief investment officer for the wealth management unit of > Bank of New York Mellon Corp., told Bloomberg Television. The unit > manages $162 billion. ``Times when it feels almost irresponsible to > shore up equities, they tend to be good buying opportunities > historically.'' > > To contact the reporters on this story: Elizabeth Stanton in New York > at [EMAIL PROTECTED]; Eric Martin in New York at > [EMAIL PROTECTED] > Last Updated: October 7, 2008 17:31 EDT --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum
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