Reply #77: Here's how the story ended. [View All]

[ozymandius]

Dow 8,870.54 Down 73.27 (0.82%)
Nasdaq 1,616.74 Down 30.66 (1.86%)
S&P 500 919.21 Down 11.78 (1.27%)
10-Yr Bond 3.76% Down 0.02
NYSE Volume 4,670,803,000
Nasdaq Volume 1,732,501,750

4:20 pm : Stocks fell Monday as concerns regarding financial and automaker companies overshadowed news of a massive Chinese fiscal stimulus and a restructuring of AIG's (AIG 2.28, +0.17) government bailout.

The S&P 500 opened 2.3% higher as overseas markets rallied on the Chinese fiscal stimulus plan, but gave up those gains as the financial sector faltered. In the end, the S&P 500 fell 1.3% in below average volume with eight of the ten economic sectors posting a loss.

China will spend $586 billion, equal to a 18% of its GDP, in a plan to support its domestic economy and restore global economic health. The two-year package will target a broad range of industries, including housing, infrastructure and health care.

In corporate news, AIG rose 8% on word its bailout from the U.S. government has been amended, including an expansion in aid to $150 billion from $123 billion and better loan terms. The move is meant to give AIG more time to sell assets after losing $24.5 billion in the third quarter, and stands to reassure investors that the insurance giant will be able to satisfy its counterparty obligations.

Despite the strength in AIG, the financial sector dropped 4.4%, with notable weakness in Goldman Sachs (GS 70.94, -6.87). Goldman had its fourth quarter earnings estimate cut to a loss of $2.50 per share from a profit of $2.71 at Barclays. Barclays cited dramatic equity market declines. On average, analysts expect Goldman to post fourth quarter earnings of $1.46 per share.

General Motors (GM 3.29, -1.07) tumbled to its lowest level in six decades after it was downgraded to Sell from Hold and had its price target cut to $0 from $4 at Deutsche Bank. GM may not be able to fund its U.S. operations beyond December without government intervention, Deutsche Bank said. Ford (F 1.94, -0.08) fell 4%.

The financial market turmoil and slowdown in consumer spending is taking a toll on retailers (-2.0%). Circuit City (CC 0.11, -0.14) filed for Chapter 11 bankruptcy protection due to stiff competition and financial market disruptions that limited the retailer's access to credit.

UPS (UPS 53.66, +1.74) and FedEx (FDX 66.27, +1.69) gained on news that they will have less competition in the U.S. starting early next year. DHL U.S. Express said it will discontinue domestic-only air and ground services to only focus on international offerings. The shipping company, owned by Germany-based Deutsche Post World Net, will cut 9,500 U.S. jobs, on top of the 5,400 jobs it has already eliminated.

On a positive note, McDonald's (MCD 56.58, +1.11) continues to benefit from its relatively low price offerings. The company said October U.S. same-store sales increased by 5.4% and global same-store sales rose by 8.2%. U.S. sales, which accounted for 35% of McDonald's 2007 revenue, were aided by the popularity of the Monopoly game.

In commodity trading, oil surged as high as 7.4% and gold gained as much as 4.7% as traders speculated that the Chinese stimulus plan would spark increased demand. Commodities (+1.7%) gave up much of those gains by the end of the session, however, with oil settling up 1.9% to $62.22 per barrel and gold advancing 1.6% to $746.10.DJ30 -73.27 NASDAQ -30.66 NQ100 -1.6% R2K -2.5% SP400 -2.5% SP500 -11.78 NASDAQ Adv/Vol/Dec 745/1.71 bln/1954 NYSE Adv/Vol/Dec 991/1.14 bln/2095