As I was getting ready for the day, I was listening to CNBC when I heard (Erin Burnett?) a female commentator say;
"Apple Computer (AAPL) is down xx% this morning after reporting disappointing results. Apple was the "it" stock for 2007, could Apple be the "shit" stock for 2008?".
Right after that comment, David Faber or someone said, "what did you say?". Erin replied, "I was just reading off the teleprompter."
I hope that someone captures this comment and puts it on YouTube, I would love to post that comment for you.
Yesterday, the DJIA was rescued after dropping about -450 points on the open. During a speech by Treasury Secretary Hank Paulson, the Federal Reserve cut the Fed Funds rate by 3/4 of a point. This cut stabilized the markets, and by the end of the day, the DJIA closed down 128.11 points.
Some of the biggest losers were Healthcare, and Energy. One could argue that Energy declined because demand decreases during periods of economic weakness. That could be a valid argument, but why did Healthcare decline?
My take is a little different. Yes, the economy could have something to do with the Energy sell-off, but when you throw in Healthcare, the decline isn't because of the economy alone.
Could the sell-off in both Healthcare, and Energy have something to do with the Democrats gaining strength in the run for the Whitehouse? If so, Wall Street may be preparing for a power shift in Washington.
As I was watching Jack Welch (Former GE CEO) on CNBC this morning, he reiterated what I have been telling you about the banks. Welch said that Big Money can be made in bank stocks if a person can buy and wait until 2009.
As for your emotions, now is not the time to be a stock wimp. Investors who have followed this blog know that we have been advocates of being underinvested for several months. Use your cash wisely, and buy methodically.
Yesterday, the financial sector had the biggest upside reversal, led by the banks. While the 10-year Treasury note yield fell to 3.48%, many high quality banks are yielding better than 6%. Today, the banks are bucking the markets trend, and are adding to yesterday's gains.
This morning, the DJIA dropped 264 points in the first 20 minutes of trading. As we speak, the Dow has erased most of its losses as Banks and Homebuilding stocks are on the rise, and helping to fuel the market's comeback.
Oil prices fell another dollar trading below $88 per barrel as speculation of a recession in the US might lead to a global economic slowdown.
According to Dow Jones, European Central Bank President Jean-Claude Trichet indicated that the ECB would not follow the Federal Reserve's lead and cut interest rates.
At 2:49 EST:
DJIA: -89.13 to 11,888
SPX: -14.13 to 1296
NASDAQ: -48.23 to 2243
