Daily Blog -01/16/09- 2:24 P.M.
The market was up briefly this morning. The DJIA managed to gain more than a hundred points before plunging to minus 70. The NASDAQ and S&P 500 delivered similar performances. Banks once again weigh heavily on the market and investor confidence.
More specifically Bank of America (BAC) is dragging down the market. BAC reported earnings this morning before the bell. Results were terrible. Analysts were expecting a gain of 8 cents a share. BAC reported a loss of 48 cents. Furthermore the company needs $20 billion in emergency funding from the government. BAC is trying to complete its acquisition of Merrill Lynch (MER) and said that MER lost more than $15 billion last quarter. In an effort to stop the bleeding BAC almost erased its annual dividend and slashed it from $1.28 to 4 cents. Shares of BAC are down another 14% and trading near $7.00 a share. I actually saw one article today where the author was suggesting that BAC and Citigroup should be removed from the Dow Jones Industrial Average.
Citigroup isn't bouncing either and C and BAC are an anchor for the financials. The XLF financial ETF is off about 4.5% and hitting new relative lows. A lot of pundits were calling Thursday's bounce in the major averages a "key reversal" day. Well today's lack of follow through definitely throws a lot of cold water on that idea.
At the moment stocks are bouncing off their lows and the DJIA is only off 13 points while the S&P 500 and the NASDAQ are flirting with positive territory.
I have to keep it short today due to some technical difficulties with my charts. Have a great weekend.