Thursday, August 16, 2007
The Fear Continues
The selling continued for the major market indices again yesterday with the Dow closing below 13,000. The Dow ended the session with a loss of 167.45 points to end on 12,861.47. The SPX fell 19.84 points to close at 1,406.70.
The consumer price index (CPI) came in as expected for the month of July, but this didn’t help the bulls much. The CPI rose 0.1 percent overall and 0.2 percent at the core. However, the core remains higher by 2.2 percent year on year, which is above the Fed’s comfort level. Even so, the Fed can’t be feeling good about the credit situation either with banks being reluctant to lend to each other.
The Fed announced yesterday that it added $7 billion in temporary reserves to the banking system via the way of overnight repos. The fear the Fed and traders have is that the subprime problems of late will continue, considering it takes time for subprime lenders to default on loans as rates head higher. So far, stocks have really taken a hit on worries about how the economy and earnings will fare with hedge funds failing and mortgage companies going out of business.
Until next time.
The consumer price index (CPI) came in as expected for the month of July, but this didn’t help the bulls much. The CPI rose 0.1 percent overall and 0.2 percent at the core. However, the core remains higher by 2.2 percent year on year, which is above the Fed’s comfort level. Even so, the Fed can’t be feeling good about the credit situation either with banks being reluctant to lend to each other.
The Fed announced yesterday that it added $7 billion in temporary reserves to the banking system via the way of overnight repos. The fear the Fed and traders have is that the subprime problems of late will continue, considering it takes time for subprime lenders to default on loans as rates head higher. So far, stocks have really taken a hit on worries about how the economy and earnings will fare with hedge funds failing and mortgage companies going out of business.
Until next time.
# posted by Paul @ 1:51 AM 
