NEW YORK, Aug. 28, 2007
Wall Street Takes A Tumble
Dow Jones Industrials Drop More Than 280 Points As Fed Minutes Fail To Soothe Investors
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Charles McGrath watches numbers from the floor of the New York Stock Exchange on Aug. 28, 2007. (AP)
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The stock market found little to assuage concerns in minutes from the Fed's last meeting, released during afternoon trading. The major indexes' losses steepened after investors parsed the minutes for signs of a possible cut in interest rates.
There had been some hope on the Street that Fed policymakers might have sent a stronger signal they were more willing to cut interest rates to help calm turbulent market conditions. But in the minutes from the Federal Open Market Committee's Aug. 7 meeting, while the central bank noted the turmoil in the markets and said, "to the extent such a development could have an adverse effect on growth prospects, might require a policy response," it didn't discuss a cut in the benchmark federal funds rate that Wall Street has wanted.
The meeting predated a number of actions taken by the central bank to try to alleviate market volatility, including the Aug. 17 lowering of the discount rate, the interest the Fed charges banks to borrow money. Wall Street, despite a calmer week after that step, seems to be growing more dissatisfied because the Fed has not yet lowered the funds rate — and with a return to the intense volatility seen earlier this month may be trying to force the Fed to act.
"Investors are getting whipped side-to-side because their expectations, which are changing almost on a daily basis, aren't being met," said Chris Johnson, chief investment strategist at Johnson Research Group. "We've gone from the roof is on fire to the Fed is riding in on a white horse, and what we're seeing now is a reality check."
Stocks were down the entire session on further worries about the economy. The Conference Board's report that consumer confidence sagged in August amid volatile financial markets and ongoing housing problems added to the downbeat mood on the Street. Keeping alive credit worries, a Standard & Poor's housing index showed that U.S. home prices in the second quarter posted the sharpest decline since 1987.
The Dow fell 280.28, or 2.10 percent, to 13,041.85, its biggest drop since Aug. 9. Stocks rose in fairly subdued trading last week, but began to pullback on Monday on sluggish economic data.
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 34.43, or 2.35 percent, at 1,432.36, and the Nasdaq composite index shed 60.61, or 2.37 percent, to 2,500.64.
Fixed-income investors were encouraged by the consumer confidence report, which could indicate the Fed will be more likely to lower rates at its September meeting. Bond prices rose, with the yield on the benchmark 10-year Treasury note falling to 4.52 percent from 4.57 percent on Monday.
Light, sweet crude fell 24 cents to $71.73 a barrel on the New York Mercantile Exchange. Oil prices fell last week on credit worries and as Hurricane Dean missed oil facilities in the Gulf of Mexico. They have rebounded in recent days, though, due to refinery problems and strong gasoline demand.
The dollar was lower against other major currencies, while gold prices were slightly lower.
Analysts said there just wasn't much to encourage stock investors in a day with many traders on vacation and little in the way of corporate news. And, the lack of rate-cut support from the Fed minutes didn't change matters.
"This is backward looking right now, the main thing you have to take out of this is the Fed continues to be worried about inflation and economic growth," said Ryan Larson, senior trader with Voyageur Asset Management. "They have already assured they stand ready to do something. But, the market was looking for more of a nod or a mention toward the credit problems — and I don't think they got it."
Further, investors might also be positioning themselves ahead of a speech by Federal Reserve Chairman Ben Bernanke on Friday in Jackson Hole, Wyo. Investors are not only looking for further details about a possible rate cut, but any impression Bernanke has about his recent campaign of injecting liquidity into the markets.
The New York Fed — which carries out the central bank's market operation — on Monday announced a 10-day repurchase agreement worth $9.5 billion to extend through the Labor Day holiday. Then, on Tuesday, the Fed announced another "repo" worth $2 billion.
"It's kind of a good sign," said Stephen Stanley, chief economist at RBS Greenwich Capital, referring to the smaller amount introduced Tuesday. "Before, the Fed was providing a lot of liquidity and it wasn't getting disseminated out to the places it was needed."
Financial services stocks were among the hardest hit during the session as investors reacted to not only economic reports that could affect the group, but a downgrade of several major players. Merrill Lynch analyst Guy Moszkowski cut ratings on Citigroup Inc., Lehman Brothers Holdings Inc., and Bear Stearns Cos. due to concerns about earnings.
Lehman Brothers Holdings Inc., the fourth-largest investment house, fell $3.47, or 6 percent, to $54.28. Bear Stearns, the fifth-largest investment bank, fell $3.78, or 3.4 percent, to $108.42. Citigroup Inc. fell $1.65, or 3.5 percent, to $46.14.
Meanwhile, the S&P housing report pushed shares of homebuilders lower. When home prices fall, owners have a hard time refinancing, which can lead to more defaults and delinquencies.
Hovnanian Enterprises Inc. fell 80 cents, or 7.1 percent, to $10.46. Luxury homebuilder Toll Brothers Inc. dropped 94 cents, or 4.3 percent, to $21.06. D.R. Horton Inc. declined 46 cents, or 3 percent, to $14.75.
Pharmacy benefits management company Medco Health Solutions Inc. said it will pay $1.5 billion in cash for diabetes treatment supplier PolyMedica Corp. Shares of Medco fell $1 to $85.11, while PolyMedica surged $6.40, or 14 percent, to $51.69.
The Russell 2000 index of smaller companies was down 21.6, or 2.74 percent, at 767.83.
Declining issues beat out advancers by a 3 to 1 basis on the New York Stock Exchange, where volume came to 2.96 billion shares compared to 2.35 billion on Monday.
Overseas, Japan's Nikkei stock average fell 0.09 percent, while China's Shanghai Composite Index gained 0.91 percent to another record. In afternoon European trading, Britain's FTSE 100 fell 1.90 percent, Germany's DAX index fell 0.74 percent, and France's CAC-40 fell 2.08 percent.
© MMVII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
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It is funny to watch these greedy Wall Street dimwits reap what they have sewn.
The tax cuts for the wealthy have not benefited the middle class and have not been put back into the economy by the wealthy.
The Middle Class have had stagnant paychecks for close to 6 years and at the same time seen incredible rises in cost of everything from milk and cereal to gas to clothes to insurance payments.
To the fools who thought Richie Rich Kid Trust Fund Baby Bush was going to help ya''ll - shame on you for being THIS stupid.
The Sheeple must lose their comfort. Their television. Their boring, mindless lives must be upset. Then, we will see the herd move...
ZEITGEISTmovie.com.
It didn''t work in the 1980s and version 2 is an even bigger failure.
Our standard of living, and now home values, are trickling down the toilet. Meanwhile millionaires pay 15% on their unearned investment income, corporations real tax rate is the lowest in history at around 6% due to all the special intere$t loopholes (was in the low 20s in the mid 1980s) while earned income tax rates for the middle class haven''t changed much at all.
Now if we just eliminate the estate tax so the Bush/Cheney daughters won''t have to pay any taxes on their Haliburton enriched trust funds then we''ll all be sitting pretty. Also, Paris Hilton will save big $$$ on her unearned inheritance income.
Anyone else planning to retire abroad like me? Last one out turn off the lights in the ''intelligent design'' classes. Invest in more advanced economies.
"Because if we''''d gone to Baghdad, we would have been all alone. There wouldn''''t have been anybody else with us %u2014 it would have been a US occupation of Iraq. None of the Arab forces that were willing to fight with us in Kuwait were willing to invade Iraq. Once you got to Iraq and took it over, and took down Saddam Hussein''''s government, then what are you going to put in its place? That''''s a very volatile part of the world.
And if you take down the central government in Iraq, you could easily end up seeing pieces of Iraq fly off. Part of it%u2026uh%u2026the Syrians would like to have in the West. Part of the eastern part of Iraq the Iranians would like to claim, fought over it for eight years. In the north, you''''ve got the Kurds. If the Kurds spin loose and join with the Kurds in Turkey, then you threaten the territorial integrity of Turkey. It''''s a%u2026it''''s a quagmire, if you go that far in trying to take over Iraq.
The other thing was casualties. Uh%u2026everyone was impressed with that fact that%u2026uh%u2026we were able to do our job with as few casualties as we had. But for the 146 Americans killed in action and for their families, it wasn''''t a cheap war. And the question for the President in terms of whether or not we went on to Baghdad and took additional casualties in an effort to get Saddam Hussein, was how many additional dead Americans was Saddam worth? And our judgment was not very many, and I think we got that right."
Savings and money market account interest is taxed at the ordinary income tax rate - another way to scr*w the middle class. Until Ronald Regan was president, interest on savings and interest paid on consumer loans was not taxed. Also, gratuities weren''t taxed either. That all changed when Reagan ''simplified'' the tax code.
WE THE PEOPLE OF THIS UNITED STATES OF AMERICA DO HEREBY AUTHURIZE OUR GOVERNEMNT TO SAVE ALL AMERICANS FROM LOSEING THEIR HOMES FROM ANY LENDING INSTATUTION
PLUS ALL CREDIT CARD COMPANY ARE ALSO BEING NAMED IN THIS ACTION.
IT IS TIME FOR CONGRESS TO HELP AMERICA INSTEAD OF ALL BIG MONEY LOBBIEST, THEY HAVE BEEN DOING FOR OVER 20 YEARS WITH YEAR AFTER YEAR BAILLING THEM OUT WITH AMERICANS TAX DOLLARS WITHOUT ASKING WE THE PEOPLE OF THIS UNITED STATES OF AMERICA FOR THE MONEY.
NOW ITS OUR TURN!!!!!!!!!!!!
JUST LIKE ALL THE BANK DID IN THE EARLY 80s AND NOW ITS OUR TIME FOR US TO BAILOUT US FOR ONCE DONT YOU AGREE
But I guess, the scheme had to end on the best person qualified . . . Bushwacker! May he go down in history as the Capone of politics.
Thank God, God is a Just God. Corruption is corruption. No reward in deception, Mr. Bush.
Posted by fascistusa
This is the dawning of the Age of Aquarius, Age of Aquarius, Age of Aquarius! Sympathy and understanding, harmony and trust abounding . . .
In your dreams baby.
americans are maxxed out on their debt so the moneymakers want to lower the interest rate so they can squeeze the remaining few points out of the american public.
all to the detriment of the dollar and the u.s. economy.
stand tough, fed...those banks already have enough money.
Some of it may be grounded in truth, but a lot of it also seems to be clever fiction. And looking backwards makes it easier to conjure up creative ideas.
And another major web site hosted an article regarding the truth on credit cards. They said very few families had over $8000 in debt. Or was it $9000? Anyway, they said the most of Americans pay off the card every month or have a balance around $2000.
Also, will these countries people want to move to take them in? If these countries have large populations and/or have mandates they wish to take care of their own first and foremost, those wanting to move there may not be able to get there.
Those folks who''ve been changing tax policy to force money to trickle up over the last couple decades probably don''t really understand the concept of living "paycheck to paycheck".
Likewise, they probably had no idea that tremendous jumps in energy prices with their subsequent impact on food prices - exacerbated by the hare-brained idea of jacking up food prices even more by diverting corn into ethanol - in a time of job losses and stagnant or declining wages (for the real 90% of Americans) would be enough to change "getting by" into homelessness.
"Money is tight" is probably not part of their vocabulary; you know it is not part of their reality.
There really are only four possible hypotheses; they''re either ignorant, stupid, evil, or a mixture of the three.
Posted by ibsteve2u
An article in Monday''s Washington Post Financial Pages tells how wealthy investors are buying stocks while panic selling is driving prices down. These wealthy investors are looking for bargains. They don''t invest to loose money. Successful investors buy low and sell high.
Posted by ibsteve2u
An article in Monday''s Washington Post Financial Pages tells how wealthy investors are buying stocks while panic selling is driving prices down. These wealthy investors are looking for bargains. They don''t invest to loose money. Successful investors buy low and sell high.
rhs648,
It will be fun to watch those greedy chumps get soaked, as the market continues to plummet.
"Buy low, sell high"...gee, why didn''t I think of that...
"The market is just reflecting the ripple effect of having rich folks running the government and rigging the tax and all other financial policies for the benefit of other rich folks..."
Posted by ibsteve2u
An article in Monday''''s Washington Post Financial Pages tells how wealthy investors are buying stocks while panic selling is driving prices down. These wealthy investors are looking for bargains. They don''''t invest to lose money. Successful investors buy low and sell high.
Oh, wait. You guys are Government Trolls. Lets not forget that FACT.
ZEITGEISTmovie.com.
The Speech that got JFK KILLED BY THE CIA, FBI, SECRET SERVICE at the orders of The FED Owning ELITE.
BUSH DID 9/11.
The Elite own the Federal Reserve. OWN IT. Not The Government.
WE ARE ALL SLAVES. The Future is CIVIL WAR B*I*T*C*H*E*S.
"Buy low, sell high"...gee, why didn''''t I think of that...
Posted by FeelFree1
Don''t worry. These people know how to make money. We could take lessons from them.
The NIKKEI (Japanese) index is down almost another 400 points!
The greedy pirates may be in their final throes.
###
rhs648,
Re: "Don''t worry. These people know how to make money. We could take lessons from them."
I don''t need any lessons from foolish greedy pirates, which is what many of these "big investors" are.
Just ask the former Wal-Mart executive convicted of fraud, how well his foolish greed turned out for him.
Just ask the former Wal-Mart executive convicted of fraud, how well his foolish greed turned out for him."
Posted by FeelFree1
You seem to know all of the answers already. Why take lessons?
Posted by JetRanger7
Unfortunately we will probably never see this happen. Having to pay high wages and benefits encourage businesses to look elswhere for their products and services. I own a business that requires a great deal of printing which is very expensive. If I could find a way to have my printing done cheaper in Mexico or China, I would certaily consider doing so.
Perhaps the most damaging myth in American culture is the idea that rich people are smart and ev eryone should do what they do.
"Successful investors buy low and sell high."
Another classic myth--investors do not do this: it is not an investment strategy because "low" and "high" are relative and can only be determined looking back. If the market dropped yesterday, you can''t tell if it is low or high today. Successful investors buy stocks that are likely to increase in value.
If someone is trying to convince you to buy stocks, it may be because they want to sell, not because they are being helpful.
Posted by rhs648
You would also hope that someone, somewhere, is paying their employees enough to patronize your business. This is happening less and less and all the fallout from people losing their homes to wall streets frantic gyrations can be traced to the above mindset.
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by rhs648
August 29, 2007 10:54 PM PDT
- "...wealthy investors are buying stocks while panic selling is driving prices down."
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Reply to this comment
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See all 28 CommentsPerhaps the most damaging myth in American culture is the idea that rich people are smart and ev eryone should do what they do.
"Successful investors buy low and sell high."
Another classic myth--investors do not do this: it is not an investment strategy because "low" and "high" are relative and can only be determined looking back. If the market dropped yesterday, you can''''t tell if it is low or high today. Successful investors buy stocks that are likely to increase in value.
If someone is trying to convince you to buy stocks, it may be because they want to sell, not because they are being helpful.
Posted by andor3
The reality is that the "smart money" has already sold a stock once it has become high. The suckers are the people who buy stocks as they are going up. Each time a stock is bought or sold, there is a loser and a winner. The winners take the money. To believe otherwise is deny reality. It is pretty east to determine when stocks are low and high. You may not buy and sell with precision, but you can come pretty close. It has worked well for me for over 25 years.