Bailout Shot Down, Markets Dive, Volatility Rises
The US House shot down the supposed pre approved financial bailout plan today, shocking stocks into an extreme sell off. Commodities followed stocks into the downward spiral, with the Goldman Sachs Commodity Index collapsing over 8%. At its lowest levels, the S&P 500 experienced a decline not seen since October, 1987. Declines outpaced advances over 20 to 1, a level also not seen since 1987. The VIX or Volatility Index exploded upward indicating levels of dread and lack of confidence not witnessed in years. The sell off is across the board but is hitting financials the hardest. The DJIA collapsed -777.68 to 10365.45, the Nasdaq melted down -199.61 to 1983.73 and the broad based S&P 500 plummeted -106.59 to 1106.42.
Wachovia Bank
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PowerRating) collapses under the weight of defaulted mortgages, falling 81.80% or $8.18 to $1.82/share. Citigroup has swooped in to take over WB’s banking business. Huge losses are projected for Dodge & Cox and Fidelity who bought millions of shares of the failed institution in the second quarter speculating on a recovery.
American Express
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PowerRating) led the DJIA lower with a drop of 12.78% or $5.05 to $34.45 after cutting earning estimates for the next two years due to the weak credit environment and consumer fear.
Cal Maine Foods
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PowerRating) – The egg farming company cracked lower due to high chicken feed costs falling 30.63% or $11.61 to $26.30.
Bank Of New York Mellon
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PowerRating) fell 18.77% or $6.83 to $29.55 on today’s general malaise in the financial system.
Gold was the only bright spot in the commodity complex today, rising $23.30 to $911.80/oz as investors look for stability. Oil fell $10.88 to $96.01 and the VIX fear gauge exploded up 34.17% to 46.61.
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