Credit continued to deteriorate this week as selling was exacerbated Monday after the House failed to pass the $700 bln bailout package. The eldest sister, the DJIA, fell by 777 points, the most in its history but snapped back Tuesday on hopes of a rescue plan. As stated last week, credit is generally a good indicator of equities and given this week’s deterioration, the SPX was not able to hold above last week’s low. Friday’s reversal lower after the House passed the bailout package does not bode well for the Four Sisters. It now finally seems the stock market is catching up to the woeful levels seen in the credit markets. Next area of support on the SPX lies in the 1060/70 area.
The Labor Department reported a 159,000 drop in payrolls for the month of September, the most in five years as the economy tilts toward a deep recession. The unemployment rate held steady at 6.1%. (10.3)
Wachovia (WB) announced it has changed course and will now be acquired by Wells Fargo (WFC) instead of Citigroup (C). A major difference between the deals is that Wells Fargo will be able to acquire Wachovia without any assistance from the FDIC. (10.3)
The House plans to have a second vote today on the $700 billion bailout package. The second vote comes after the bill failed on Monday sending the Dow Jones Industrial Average lower by a record 777 points. (10.3)
The SEC issued fair value guidance this week giving companies more discretion valuing assets, saying distressed sales do not need to be used to determine fair value. (9.30)
Warren Buffet will buy $3 billion in General Electric (GE) preferred stock at a discount plus have warrants to buy an additional $3 billion in common equity. The move represents a huge vote of confidence in the struggling blue chip. (10.1)
September sales for automakers plunged as the battered industry shows no signs of recovery. (10.3)
This Weeks Winners & Sinners
