Market Summary: Fri. Feb. 15, 2008

I would say Friday’s performance was good (even though the markets ended the day slightly down) given the negative news that hit the market in the morning. One thing to take note was the low volume. This was because the markets will be closed Monday for Presidents’ Day and many traders/investors were gone for the extended holiday.

The consumer confidence (actually called the Michigan Consumer Sentiment Index) number came in well below expectations. According to CNBC, the reading of 69.6 (market was looking for 76.5) was the lowest in has been since Feb. 1992!

Also, Best Buy (the retailer who has been kicking Circuit City’s butt) came out with some bad news. They lowered their full-year guidance and hinted at a decline in consumer spending. The CEO said that “soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets.” Best Buy stock declined 2.5% and most “chip” stocks were also down (Intel, ADM, and NVIDIA). (Source: Bloomberg.com)

We got some inflation data (regarding import and export prices) and it was stronger than expected. Food prices were up 3.1% and gas prices were up 5.5%. (Source: CNBC TV)

The only major earnings report came from Abercrombie & Fitch and they gave mixed numbers. For their fourth quarter, they achieved record revenues, but it fell short of analysts’ expectations. Also, their guidance for ’08 was below what The Street was looking for. The stock was down only 0.87%. (Source: TheStreet.com)

There was news that FGIC (the bond insurer that was just downgraded by Moody’s) might consider splitting up its business to save its ratings on its only profitable part – municipal bonds. According to Bloomberg.com, the major bond “insurers use their AAA ratings to back about $2.4 trillion of debt.” If a downgrade occurs, that debt is not worth $2.4 trillion anymore. It just disappears! Two very important names to pay attention to are Eliot Spitzer (NY governor) and Eric Dinallo (Superintendent of the New York State Insurance Dept.). These two individuals have been in the news a lot recently and they have lots of control/regulatory power over the bond insurers.