The markets are imploding today amid fears which Citigroup says are unfounded that Fannie Mae (NYSE:FNM ) and Freddie Mac (NYSE: FRE) may not have enough capital to withstand the crisis in the housing market and continued worries about oil prices prompted by missile tests by the government of Iran. This is not just a perfect storm; it's a perfect season of calamities.Want to know how bad it is? Apple Inc. (NASDAQ: AAPL) shares are down on the day the geeks around the world are waiting in line for the new iPhone, which has gotten rave reviews. Amazing. If people are looking for an excuse to buy Apple, this may be it.
Other stocks that seem to be doing well are Anheuser-Busch Cos. (NYSE: BUD) because InBev raised its unsolicited offer, and General Electric Co. (NYSE: GE), whose in-line quarter was greeted by cheers by Wall Street.
But the bad news is outweighing the good for now. Financial stocks are getting slaughtered because of Fannie and Freddie and probably will continue to do so for a while. Shares of Lehman Brothers Holdings Inc. (NYSE: LEH) are getting crushed, plunging more than 20%. Goldman Sachs Group Inc. (NYSE: GS) and Merril Lynch & Co. (NYSE: MER) are both down more than 5%.
Even oil stocks such as Exxon Mobil (NYSE: XOM) and Chevron Corp. (NYSE: CVX) got hammered as investors figured that people who can't afford their mortgages probably won't be filling up their gas tanks, either. Good theory, I suppose.
So now that the Dow has dipped below 11,000. What's psychological barrier will fall next? 10,000? Stay tuned investors, things are about to get interesting.
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Reader Comments (Page 1 of 1)
7-11-2008 @ 1:18PM
speculator said...
If the market can hold heer it could be a near term low. Around 1230 on the S&P.
www.theinvestingspeculator.com
7-11-2008 @ 3:10PM
larry said...
fannie and freddie are solvent. if the govt wants to provide stewardship to anyone they should take stewardship of the insurance companies that insure them or let the large mutual funds that have invested billions of dollars in fannie and freddie take stewardship of them.