Tuesday, December 02, 2008
Gone In A Day
Monday was a lousy start to the week. All of last week’s gains disappeared as we got off to a very bearish start to the month. The Dow lost 679.95 points to close at 8,149.09. The SPX declined 80.03 points to finish the session at 816.21.
After the largest five session gain in 75 years, some profit taking was expected.... but not at the rate seen Monday. Disappointing economic news and the official announcement that we are in a recession combined to convince traders to sell. As has been the case the past several months, volatility continues to be extreme, leaving traders unsure of what to expect from day to day and hour to hour. This of course makes trading tough.
The economy continued to be a major concern with construction spending and the ISM Mfg. survey both coming in worse than expected. In October, construction spending fell 1.2 percent; 3-tenths lower than anticipated. As has been the case for some time now, private single family construction was the weakest part of the report. The ISM Index was also very weak, falling to a level of 36.2 in December from 38.9 in October. This is the lowest reading for the index since the recession of 1980. The employment component didn’t fall far, down just 4-tenths to 34.2, but this still is a level that points to weakness in the November employment data.
Treasury Secretary Paulson stated today that the government is working on more programs to help stimulate lending. The National Bureau of Economic Research officially declared that the U.S. economy is in a recession and has been since December 2007. This could be viewed two ways; one being that the recession could end soon with the other that this shows just how severe the current recession has become. The recessions in the mid-1970s and early 1980s lasted about 16-months, but economists don’t expect this recession to end any earlier than the middle of next year!! How they know that is anyones guess!!
Its not easy out there. Lets see what happens today.
Until next time.
After the largest five session gain in 75 years, some profit taking was expected.... but not at the rate seen Monday. Disappointing economic news and the official announcement that we are in a recession combined to convince traders to sell. As has been the case the past several months, volatility continues to be extreme, leaving traders unsure of what to expect from day to day and hour to hour. This of course makes trading tough.
The economy continued to be a major concern with construction spending and the ISM Mfg. survey both coming in worse than expected. In October, construction spending fell 1.2 percent; 3-tenths lower than anticipated. As has been the case for some time now, private single family construction was the weakest part of the report. The ISM Index was also very weak, falling to a level of 36.2 in December from 38.9 in October. This is the lowest reading for the index since the recession of 1980. The employment component didn’t fall far, down just 4-tenths to 34.2, but this still is a level that points to weakness in the November employment data.
Treasury Secretary Paulson stated today that the government is working on more programs to help stimulate lending. The National Bureau of Economic Research officially declared that the U.S. economy is in a recession and has been since December 2007. This could be viewed two ways; one being that the recession could end soon with the other that this shows just how severe the current recession has become. The recessions in the mid-1970s and early 1980s lasted about 16-months, but economists don’t expect this recession to end any earlier than the middle of next year!! How they know that is anyones guess!!
Its not easy out there. Lets see what happens today.
Until next time.
# posted by Paul @ 3:55 AM 
