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Daily Blog -02/12/09- 2:19 P.M.


Wall Street Still Unhappy with Washington

The talk on Wall Street is still about Treasury Secretary Tim Geitner's lack of details in his speech on Tuesday. The market is worried about how the government is going to approach the pricing of toxic mortgage-related assets. This is leading to some very large declines in the financials today. The BKX banking index is off 7.6% while the BIX banking index is down 10.4%. Citigroup (C) is down 5.9% to $3.46. BAC is off 8.7% to $5.54. WFC is down 11.6% at $15.50. JPM is down 6% at $24.50.

The stock market plunged sharply this morning with the Dow Jones Industrial Average hitting 7,723 and the S&P 500 slipping to 811. The bad news right now is that the midday bounce is failing. If you're an intraday trader this looks like another bearish entry point.

Chart of the S&P 500:

Chart of the Dow Jones Industrials

Chart of the NASDAQ Composite

Weighing on the market is a story released by CNBC that Goldman Sachs held an "emergency" meeting within hours of Geitner's speech. They're calling it the "Goldman Sachs roundtable" meeting where close to 20 of the company's biggest hedge fund managers and clients from across the country flew to GS' headquarters to discuss how to operate and what can be done in the absence of any details from Geitner.

In other news retail and housing were making headlines. The Commerce Department released their latest figures for U.S. retail sales in January. The report showed a surprising 1% gain in sales ending a six-month decline. Most pundits are calling this a fluke and blaming seasonal adjustments for a positive number. Both the November and December figures were revised lower by 0.3%. The retail stocks are not seeing any strength from this report with the RLX index off 2.4%.

Another report out today was the January foreclosure numbers, which showed an 18% jump from a year ago but a 10% drop from December's level. Don't get your hopes up just yet. The drop from December merely reflects a moratorium on foreclosures from the government-sponsored Fannie Mae (FNM) and Freddie Mac (FRE) as well as a similar freeze on foreclosures in Florida, one of the states hardest hit by the housing crisis.

The only sectors showing strength today are healthcare (+0.7%), biotech (+1.3%) and gold futures with the GLD up 1.1% as investors continue to move money into the safe-haven trade.



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