Stocks had their worst day of the year finishing down just about 3%. Continued worries about financial companies’ health dragged the markets lower. The decline was broad based as 95% of the S&P 500 stocks were lower on the day. The majority of commentary I hear on CNBC is now bearish (finally) and stocks are at a much fairer value today than they were early last week. I have begun to make my “wish list” of stocks I want to buy on any further weakness – you should do the same. I do believe, though, that stocks will continue to decline as more and more companies report poor earnings, give cautious 2009 guidance, and lay off more workers. Nothing new, but the market needs to do a little catching up to the downside.
Here’s all the bad news from today:
1) December retail sales fell 2.7%. Analysts were expecting a decline of 1.2%. Everyone knows retail sales have been weak, so this really should not have been that big of a surprise.
2) Crude oil dipped below $36 per barrel. Once again, today’s inventory report was bearish, that is, it showed signs of increased supply.
3) Nortel Networks filed for Chapter 11 bankruptcy. “Nortel Networks Capital has more than 100 creditors owed $100 million to $500 million.” Watch out for companies with too much debt. With expensive credit any company that has debt coming due this year should be sold.
4) Deutsche Bank announced it lost $6.3 billion in the fourth quarter and will only issue a $0.50 dividend compared to 2007’s $4.50 pay-out. Shares of DB were down over 9% on the day. Barclays, another European bank, was down 14.5% after announcing 2,000+ job cuts.
5) Shares of Citigroup were down 23% today! There is talk that the company will get broken up even further, and investors are becoming more and more displeased with CEO Vikram Pandit.
6) After the bell, there was a report that Bank of America is close to receiving a second round of TARP funds from the government. The reason? BofA needs more cash to help with its Merrill Lynch acquisition. Shares are down more than 25% in the last five days.
7) After the bell, Apple announced Steve Jobs will be taking a leave of absence until July because his health problems are “more complex” than he had thought. Shares are down about 7% in after hours trading. Some are saying Apple mishandled this situation because just last week Jobs was healthy but had a treatable hormone imbalance.
8) Under Armour, Tiffany, and Bunge issued earnings guidance that was below analysts’ estimates.
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