Will Greenspan Deliver?
Worries over Japan’s deteriorating banking system and concerns over plunging
European markets set the stage for a broad-based selloff in U.S. stocks
Wednesday that took to Dow below 10,000 for the first time since October.
Banks were the hardest hit groups as the global economy became yet another
big concern for stocks. A downgrade of a slew of Japanese banks by Fitch helped
weigh on the banking group.
Stocks finished off of their intraday lows but still took a hit as the Dow
sank 3.0%, the S&P 500 slid 2.6%, and the Nasdaq gave up 2.1%. Bond traders
commented that the slumping stock indexes had the Fed Fund futures factoring in
a 60% to 70% chance of a 75 basis point rate cut when the Fed meets next week.
Volume remained moderately heavy and roughly equaled Tuesday’s levels as 2.12
billion shares traded on the Nasdaq and 1.37 billion shares traded on the NYSE.
“I think we still haven’t quite reached buy-side capitulation. I think
you’ve seen sell-side capitulation over the last two months as far as the
analysts throwing in the towel at the absolute bottom which typically is a good
sign,” said Gregg Parise, General Partner, Dorado Capital Management.
“I’m pretty much looking for one more down leg here, a good washout, and
the difficulty here is measuring whether it comes this week in front of the Fed.
So, I think we’re close. I think this is all good action in really kind of
putting in a final bottom,” he added.
According to preliminary numbers, the Dow lost 317.34 to 9973.46, the Nasdaq
fell 42.76 to 1972.02, and the S&P 500 slid 30.95 to 1166.71.
Japanese stocks
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eking out a slight gain of 0.2%.
Sectors under pressure were insurance
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broker/dealers
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and banks
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Techs avoiding the selloff included Dell
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Also up in tech-land were New Focus
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double average volume, and Monster.com parent company TMP Worldwide
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which rose 2 9/16 to 40 5/8.
Banks were hit particularly hard, and the biggest losers in the Dow included
Citigroup
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each lost more than 7%.
Evidence of pain in the financials showed up in some battered broker/dealers,
with Lehman Bros.
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down 4%, and Goldman Sachs
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Looking ahead, the weekly jobless claims will be released at 8:30 AM ET, and
analysts will be watching for more signs of rapid economic deceleration. Last
week’s number was 370,000. Due out at 10:00 AM ET in the Philadelphia Fed
Survey, and estimates look for a decrease of 25.0.