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Market Commentary Stocks for a large part of the day traded
Stocks for a large part of the day traded in a narrow
range as acquisitions in the technology sector could not offset the negatives in the financials, the result of a widening probe of mortgage sales/trading practices beyond that of Goldman.
However late in the day selling accelerated sending
the averages down over 100 points. The named culprits
1. Expanded
mortgage probe
2. Renewed sovereign debt concerns given widely publicized anticipated strikes against austerity measures.
3. Earning sustainability in the techs
4. Strengthening dollar that makes American products more expensive abroad
5. General
nervousness over everything including the integrity of trading systems, searching for another catalyst to move higher.
I would like to comment about number one. As
first written about a year ago, the proverbial all clear sign for the economy/markets/financials would be the inevitable law suits/probes/hearings surrounding the events of last year. In
my view 12 month ago the markets would have been unable to withstand any potential legal challenges, shattering the fragile confidence that was then emerging.
Moreover, historically the finality of any such crisis
is new legislation that lowers the probability of events again occurring. I ask rhetorically however, does not this new legislation sow the seeds for the next calamity? In
my view Sarbanes Oxley, the result of the Enron/WorldCom fiasco, was a contributing factor to yesterday’s crisis.
Today is a heavy data day as retail sales, industrial
production/capacity utilization and the Michigan Consumer Sentiment survey are released. All data point can affect trading. Analysts are expecting a 0.2% increase in overall sales, a
0.7% increase in industrial production, a 73.8% capacity utilization rate and a 73.5 reading.
Commenting briefly upon yesterday’s trading
in the treasury market, bonds prices were nominally lower following “fair” demand for the 30 year treasury auction. Today’s data can greatly influence the direction
of treasuries.
Last night the foreign markets were down.
The Dow should open moderately lower on fears that
The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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