Worse to come?
Friday, July 11, 2008
If you have a nervous disposition, and you're already feeling shell-shocked, be warned: As rough as the stock market looked midway through Friday, the fact that this is the day before a summer weekend could make the closing minutes of activity particularly nerve-racking.
Note that the last hour of trading could be volatile today, particularly in the U.S., as it could give an indication of investor sentiment toward equities,” said Colin Cieszynski, market analyst at CMC Markets Canada, in a note.
“In particular, markets may show how much fear is out there depending on investors' willingness to hold long or short positions heading into a summer weekend.”
So far, there seems to be little willingness to hold onto anything at all, except cash. At midday, the Dow Jones industrial average was down 197 points, or 1.8 per cent, to 11,032. The broader S[amp]amp;P 500 was down 20 points, or 1.6 per cent, to 1233. Just one stock on the 30-member Dow was up, and only slightly: General Electric Co., up 0.8 per cent.
The swarm of losing stocks was led by financials, amid growing concerns that a foot is about to drop in the sector, in the form of a failure, leading to a cascade of losses elsewhere. The S[amp]amp;P 500 financials index was down 3.9 per cent. Particular names were clobbered: Bank of America Corp. was down 6.5 per cent and JPMorgan Chase [amp]amp; Co. was down 6 per cent. As for Fannie Mae, one of two mortgage finance companies at the centre of this particular storm, it was down 23 per cent.
All 10 subindexes within the S[amp]amp;P 500 were down, including energy and materials. That's surprising, given that crude oil rose to $145.87 (U.S.) a barrel, up $4.22, and gold rose to $958.45 an ounce, up $10.80.
In Canada, the S[amp]amp;P/TSX composite index, which had been up earlier in the day thanks to energy and gold producers, dipped into negative territory at noon. It fell 42 points, to 13,702. Materials were up 2.1 per cent and energy was up 0.7 per cent. But financials fell 2 per cent, with Royal Bank of Canada falling 4.1 per cent to its lowest level since 2005.
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