Wednesday, August 10, 2011

STOCKS TUMBLE

Stocks Skid 3%, Led by Banks; Vix Surges 15%


Stocks extended their losses Wednesday to wipe out most of the previous session's sharp rally as financials led the decline amid jitters over the U.S. economy and the ongoing euro zone crisis.

The Dow Jones Industrial Average plunged sharply, led by Disney [DIS 30.77 -3.93 (-11.33%) ] and BofA [BAC 6.978 -0.622 (-8.18%) ], after surging over 600 points in the final hour of trading in the previous session amid a heavily volatile session.

The S&P 500 and Nasdaq also declined more than 3 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded near 40.

All 10 S&P sectors slumped, led by financials and consumer discretionary.

(Story continues below...)

We are in a dire situation in this country today, and small publications like this one do not have the huge resources of George Soros pouring in like our liberal friends.

Worth Reading is not funded by the government like NPR.

Worth Reading is not funded by the government like PBS.


Please become a supporting member and help fund this ongoing effort to provide you with news and commentary relevant to our divided nation.

Help us get back our simple conservative values. Remember, the Bigger the Government - the Smaller the citizen!

Member Options
Your Comments

On Tuesday, stocks surged to see its biggest one-day gain since May 2010 in wild day of trading even after the Federal Reserve's statement promising to hold interest rates at their current low level for the next two years did little to alleviate fears over the economy.

According to a Reuters poll, economists saw odds of around one-in-three that the U.S will slip back into recession, heightening expectations the Fed will launch another round of monetary easing.

Goldman Sachs also reviewed its position on monetary stimulus, saying there is a chance that the Fed will resume quantitative easing later this yer or in early 2012.

Financials led the market selloff—Bank of America [BAC 6.978 -0.622 (-8.18%) ] tumbled after the financial giant agreed to sell part of its home-loan portfolio to Fannie Mae in an effort to shed assets and pare its exposure to an array of mortgage woes, according to the Wall Street Journal. BofA has plunged about 15 percent over the last week.

In corporate news, HSBC [HBC 42.31 -2.61 (-5.81%) ] confirmed it was selling its $30 billion U.S. credit card arm to Capital One Financial [COF 41.23 0.46 (+1.13%) ] for a premium of $2.6 billion, as Europe's top bank streamlines its operations by getting rid of unwanted businesses.

Meanwhile, Bank of New York Mellon [BK 19.91 -1.20 (-5.68%) ] said it is cutting 1,500 jobs as part of the bank's expense-reduction program.

On the earnings front, Disney [DIS 30.76 -3.94 (-11.35%) ] plunged more than 10 percent evena fter the conglomerate beat both profit and revenue expectations. In addition, Evercore Partners cut its price target on the firm to $44 from $50.

Macy's [M 25.16 -0.28 (-1.1%) ] toggled between positive and negative territory after the department-store chain reported a higher-than-expected profit and raised its earnings forecast.

Tech bellwether Cisco [CSCO 14.03 -0.025 (-0.18%) ] and media giant NewsCorp [NWS 14.58 -0.33 (-2.21%) ] are slated to post earnings after-the-bell tonight.

GE [GE 15.44 -0.52 (-3.26%) ] was added to Citi's "top picks" list.

Meanwhile, gold prices climbed, hovering near an all-time high around $1,778 an ounce. (Read More: What's the Best Way to Invest in Gold?)

And weekly mortgage applications gained last week as interest rates plunged to their lowest level in 2011, according to the Mortgage Bankers Association.

European shares turned negative, led lower by Italian and French banks as renewed concerns over the euro zone sovereign debt crisis overturned some earlier enthusiasm in choppy trade. Meanwhile, Moody's reiterated its AAA-rating on France and maintained its stable outlook on the country.