Down Once Again

Today we saw the Dow plunge 280 points and the S&P dropped 34 points based on EXPECTED bad news and analyst downgrades of three major investment banks.

What was expected is what happened, so why the big Deal?

A conference board reading of consumer confidence dropped 7 points to 105 and it's lowest level in a year. This was still better than the 104 analysts had predicted. Here is what I don't get about consumer confidence readings...they are poor indicators of consumers actually changing their spending habits. Look at this headline. Katrina was a singular event that effected consumer confidence but did not change spending. But the news held a cloud over the proceedings and the news continued to roll in.

Home prices dropped the most this quarter than any other in the index history. And is anyone really surprised by this news?

Fed notes from their last meeting were released. I'm not sure why such weight was put on the comments from this meeting. The Fed have issued a statement since their last meetings discussing the downside risks in the market.


Merrill Lynch downgraded Bear Stearns, Lehman Brothers, and Citigroup. All four companies, including Merrill Lynch dropped at least 3.4% today. All these companies are mired in the current sub prime mess to one extent or another. Again not surprising news that a downgrade from "buy" was completed.

American Express was the Dow laggard losing over 4% over concern about rising defaults with the company. Not a shocker. News that American Express was struggling with rising defaults is old news. Remember the company increased their amount held for losses 85% in their last earnings release?

It is going to be an interesting for the rest of this year. The ups and downs are not over, even when news that hit the markets is not totally unexpected.