So, the Dow dropped 220 points today and investors felt the New Year was spoiled. It will probably get much worse so today may actually have been a good warm up.
Wall St. expected the financial, housing, and auto sectors to be hard hit. Ford Motor Company (NYSE: F) hit a 52-week low today. A number of the banks, investment firms, and home builders are as far down as they have been in years. CNBC made comments at mid-day that both Merrill Lynch & Co., Inc. (NYSE: MER) and Citigroup, Inc. NYSE: C) were preparing lay-offs and that Citi might have another $10 billion in write-downs. No one sane expects the sectors involved with housing, finance, or credit to rebound in the first half of the year.
The malaise among consumers has already spread to retail shares. Holiday spending was weak. Target Corporation (NYSE: TGT) has already warned it will miss numbers. Most of the other large retailer are likely to follow suit.
Unfortunately, the early signs are that tech may struggle as it moves into the New Year. Prices of x86 and memory chips are still falling. Intel Corporation (NASDAQ: INTC) and Advanced Micro Devices, Inc. (NYSE: AMD) were downgraded today. Concerns about spending by telecom and cable companies have pushed Cisco Systems, Inc. (NASDAQ: CSCO) down. Among the mega-cap tech stocks Microsoft Corporation (NASDAQ: MSFT) and Oracle Corporation (NASDAQ: ORCL) are doing well, but they cannot carry the sector.
What that leaves the market is the companies that sell consumers inexpensive items, the things they can still afford. The Procter & Gamble Company (NYSE: PG), The Coca-Cola Company (NYSE: KO), and McDonald's Corporation (NYSE: MCD) fit that bill. But, together they and their peers are a very thin thread for holding up the market.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-03-2008 @ 1:05AM
Alouisis said...
Thanks George.
Look, if analysts continue to pretend that M3 doesn't matter, unemployed means that you have recently been employed, housing affordability can be achieved through magical loans, and government debt is irrelevant, then we will continue to be 'surprised' by the economy.
When the congress and the president finally acknowledge the actual state of our economy, we can do what is necessary to achieve real growth and save our economy.
If they all persist in pretending the economic problems do not exist, we will end up pretending there is prosperity and pretend prosperity is a depression.
1-02-2008 @ 7:41PM
johnclrdsprn said...
Don't look to the clowns in D.C. to have a grasp on the economy! Besides, they are the cake eaters. They don't have a concern what their damaging and inept policies have wrought on the American citizen!! Let them eat their cake and choke on it!!
1-02-2008 @ 10:11PM
Walter said...
What would be nice is if the interest on credit card become tax deductable again. The government want to help the folks with mortgage issues, how about a little help for some other folks?
1-02-2008 @ 10:50PM
mike n said...
I'm not going to watch the rich get rich. I'm going to jump in and invest in the same stocks as them. So far for past several years, they have bought the Apple I-Pod stock, Google,Gamestop, and oil stocks like Schlumberger(SLB).
1-08-2008 @ 9:23PM
ed klein said...
China will do OK. India is fine. And Russia
is awash in oil money.
Maybe we can corner the Bible market.