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Tuesday’s Market Recap (10/21/2008)

Posted on: October 21, 2008 - Email Article - Printable Version

Derek Stevens

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All three major U.S. stock indices ended with losses at the end of the trading day today. The Dow fell 2.50%, or 231 points to end the day at 9,033. The S&P and the Nasdaq Composite followed suit and ended with 3.08% and 4.14% losses respectively. Stocks couldn’t keep the midday rally alive as the closing price of yesterday’s Dow proved to be a sign of resistance.

Terrible earnings releases, led by Yahoo! [YHOO: 12.86, +0.01 (+0.08%)], and a forecast of huge oil supply, helped fuel Monday’s bearish market.

The Federal Reserve announced today that they may lend up to $540 billion to create liquidity in money market mutual funds. If this new facility is approved, the Fed will buy certificates of deposit and commercial paper from money market mutual funds, which has been under pressure as of late. JP Morgan [JPM: 29.25, -2.10 (-6.70%)] will once again assist the Fed, and sponsor this action. This plan intends to help improve conditions so banks and other financial institutions will be more inclined to lend to other banks, consumers, and businesses.

On the other side of the world, the Nikkei advanced 3.34%, while the Hang Seng declined 1.84%. Nikkei futures in the United States fell as the Mitsubishi UFJ [MTU: 6.27, -0.03 (-0.48%)] and Toyota [TM: 65.62, -0.75 (-1.13%)] ADRs declined on expected earnings misses. In Europe. the FTSE fell 52.94 points, or 1.24%, and the DAX declined 0.78%, again because of earnings concerns. The CAC actually ended higher today, and closed up 1.05%.

Supply and demand issues continue to be a problem for the energy industry as demand forecast decreased once again today. Not helping the cause, Saudi Arabia’s former oil minister says oil prices will keep falling if they don’t do anything about the over-production. OPEC also announced that next year we will experience a huge supply of oil if no action will be taken. Oil prices dropped $3.36 at the market’s close today. Gold prices continue their downward spiral today as prices fall an additional 2.7%. The Dollar continues its appreciation against the Euro today with $1 now equaling 0.7656 Euros. In contrast, the Dollar sharply lost value to the Yen, and is now worth 100.48 Yen.

That’s all for today, catch me tomorrow, same time, same place, for the Bullish Banker’s Daily Market Recap.

-Derek Stevens

Disclosure: The author that the mutual fund is associated with is long JPM.

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