Market Summary: Fri. Feb. 8, 2008

Markets ended the day mixed as financials were dragging down the Dow and S&P while tech kept the Nasdaq in positive territory. Continued talk of sub-prime mortgage losses kept the financials down. MBIA, the troubled bond insurer, announced they would issue $1B in common stock (up from the previously mentioned $750M) in an effort to maintain their AAA credit rating. Shares will be sold at $12.15, below Thursday’s closing price of $14.20.

Tech was strong on the day (that’s the first time I’ve said that in a very long time) thanks to Amazon.com. They announced a $1B buy back program. Remember, less outstanding shares equals a higher price for the stock. Hewlett-Packard, Google, Apple, and Microsoft were also strong.

Crude oil, as well as the energy stocks, was up big on the day thanks to news from OPEC that they would reduce output in an effort “to prevent prices from falling below $80 per barrel” (Bloomberg.com). Also, news of a damaged pipeline in Nigeria helped prices get to almost $92 per barrel.

The economic stimulus package that everyone has been talking about for the last month finally made its way through the Senate. It is valued at $167B and will be distributed to individuals making up to $75,000 and couples making up to $150,000. This rebate will hopefully provide a boost to GDP the second half of the year – assuming people will spend the money.

The G7, consisting of the U.S., the U.K., Canada, Italy, France, Germany and Japan, said they expect worldwide writedowns to be around $400B (so far there have been about $146B in writedowns). Many central bankers announced (or at least hinted) they will lower rates at their upcoming meetings in an effort to stimulate economic growth. Hank Paulson, U.S. Secretary of the Treasury said “The current financial turmoil is serious and persisting.” When asked about the U.S. economy he said, “I am confident in the long-term health of the United States economy and I expect that it will continue to grow in 2008. The housing correction, high energy prices, and capital market turmoil have combined to weigh on near-term growth.”

One interesting fact about the huge decline in stock prices since the beginning of the year: over $6.7 trillion in market value has been erased!

Also,Yahoo! rejected Microsoft’s $44.6B hostile takeover bid over the weekend and they are looking for at least an offer of $40 per share.

McDonald’s was also strong thanks to a 1.9% increase in January U.S. same-store sales. Comparably in Jan. 2007, sales growth came in at 3.6%. Even some of the so-called “immune” companies are feeling the pain of the slowing economy. International same-store sales came in at 5.7% compared to a 4.9% increase the same period last year.

Next week will be fairly slow in terms of economic and earnings news. Pay attention to Monday’s Fed Term Auction Facility when they will auction $30B to banks. Also, on Thursday Ben Bernanke testifies in front of Congress regarding the health of the economy.