Closing Update for Thursday, Oct. 1: Dow's Big Plunge

4:10 PM, Oct 1, 2009 --

• NYSE down 193.27 (2.8%) to 6,717.61.
• DJIA down 205.2 (2.1%) to 9,508.
• S&P 500 down 27.2 (2.6%) to 1,030.
• Nasdaq down 49.60 (2.34%) to 2,072.82.

GLOBAL SENTIMENT

• Hang Seng down 0.28%
• Nikkei down 1.53%
• FTSE down 1.68%

UPSIDE MOVERS

(+) BIOF amends credit agreement.

(+) BIG gets analyst upgrade.

(+) CHTP reports statistically significant study results for Droxidopa.

DOWNSIDE MOVERS

(-) BAC remains active after late Wednesday announcement that CEO Lewis to be out at year end.

(-) HSY down as WSJ story says company won't compete with Kraft (KFT) for Cadbury.

(-) LEAP says Cricket will sell PAYGo products at Target.

(-) BCRX loses evening gain that followed response to HHS regarding Peramivir for Influenza, launch of two Phase 3 trials for Peramivir in hospitals.

(-) XOMA initiates Phase 2 program for XOMA 52 in Type 2 diabetes and cardiovascular disease.

(-) HALO loses upside on data showing effectiveness of diabetes treatment

(-) CTIC reports high rate of complete remission in OPAXIO study.

(-) TER raises outlook to above Street view.

(-) SKS selling shares.

(-) VICL says Navy funds its H1N1 flu vaccine.

(-) CSCO making $3 billion acquisition of Tandberg.

(-) AKAM gets analyst downgrade.

(-) RAD says same-store sales dip.

(-) NVDA gets downgrade.

(-) RVSN gets downgrade.

MARKET DIRECTION

Stock averages close at session lows, falling for sixth in seven sessions followng mixed economic data. The DJIA sheds more than 200 points, its biggest one-day plunge in nearly three months.

Disappointing reports on jobless claims and manufacturing topped the better news found within housing and consumer spending data.

Crude oil fell early on but recovered to close up 0.3% at $70.82 a barrel. The dollar mostly rose against other major currencies, while gold prices slid.

Earlier, the Institute for Supply Management said its index of manufacturing activity in September slipped to 52.6 from 52.9 in August. The number fell short of analysts' expectations.

The Labor Department said new claims for jobless benefits rose last week to 551,000. Economists polled by Thomson Reuters had predicted claims would come in a 535,000.

The Commerce Department said consumer spending surged by the largest amount in nearly eight years in August, as personal income growth lags. Consumer spending rose 1.3 percent, fueled by cash-for-clunkers car sales incentives. Incomes edged up 0.2 percent.

Meanwhile, the National Association of Realtors said pending home sales in August rose 6.4 percent from July to 103.8. Economists surveyed by Thomson Reuters expected the index would rise to 98.6.

Federal Reserve Chairman Ben Bernanke, testifying before Congress this morning said that protecting consumers from abusive practices involving mortgages, credit cards and other financial products is "vitally important." The administration wants to create a consumer protection agency for risky financial products, but Bernanke has criticized the plan and wants to keep those powers within the Fed.

Bernanke conceded that the Fed didn't do the job it should have in protecting consumers, but said changes are underway.

With earnings season about to start, investors will also be gauging corporate earnings and guidance for signs of the economy's direction. Wall Street closed the books on a third quarter that brought some 15% gains for the major averages.

Comments

[Mark Bern:]

I read a comment just yesterday predicting that there would be no more 200 point down days on the DOW since central banks were stepping in to prop up the markets whenever stock prices started down. Isn't it ironic that today's move would come just one day later?

Oct 01 04:44 PM

[Shishir Nigam:]

Consumer spending is rising. At the same time, the savings rate is also rising, bank lending continues to decrease, and credit card defaults rise. So where exactly is the increase in spending coming from?

Beats me! Another instance of circular reasoning?

For more analysis, check out my blog: youngandinvested.com

Oct 01 04:48 PM

[debtacid:]

No irony, just good planning. They need to bring it down so they have a low starting point for the next quarter...

Oct 01 04:48 PM

[Mayascribe:]

Mark: Maybe, just maybe, a positive earnings season can stall this drop. The above indicators, Mr. Copper's chart over the last five weeks, has me creating sideline cash in urgent fashion.

Oct 01 04:57 PM

[AlphaKing:]

Here we are now 3% lower than where I gave a warning signal up at 9850. As suggested in my initial warning comment I believe we still have at least another 1-2% move lower in the short term, then there is some strong support. If we get a break below 9300 level, which is moderately likely due to the bearish pattern formation with which a solid break below 9300 would confirm. Confirmation should then bring at least another 5% drop, but I believe closer to 12-15% fall from there in the medium term.

Oct 01 06:01 PM

[vman650:]

The time has come the Walrus said. To put it in simplistic terms, "Where is the beef" ? This market has priced in a V shaped recovery with no data to back it up. Good data has already been priced in. Continuation of bad unemployment numbers or a major bank failure could mean that the green shoots have been sprayed with round up.

Oct 01 06:27 PM

[Socialism c...:]

[quote]
Federal Reserve Chairman Ben Bernanke, testifying before Congress this morning said that protecting consumers from abusive practices involving mortgages, credit cards and other financial products is "vitally important."
[end quote]

How about protecting taxpayers from abusive practices by the government??? This whole thing is starting to collapse -- the attempted prop-up has failed -- and when it goes down, we'll be looking up at the March lows. Civil disorder will result. And we'll see how Bernanke and the rest of the politico-financial elites like what's coming their way then. 'Cuz their little pretense at looking out for the consumer isn't fooling anyone!!!

Oct 01 06:33 PM

[JET1C:]

Listen to the TechTicker piece from the guy predicting a huge bull run for the next 10 years, ending at double today's (maybe yesterday's) Dow.
Perfect timing on his part wouldn't you say.

Oct 01 06:42 PM

[H. T. Love:]

Not surprising - the stick saves have really declined the last couple of weeks. GS tgt of 1060 on S&P500 was hit, so it's time.

Today there wasn't even an attempt.

HardToLove

On Oct 01 04:44 PM Mark Bern wrote:

> I read a comment just yesterday predicting that there would be no
> more 200 point down days on the DOW since central banks were stepping
> in to prop up the markets whenever stock prices started down. Isn't
> it ironic that today's move would come just one day later?

Oct 01 07:02 PM

[bottoms-up:]

I agree 100 percent with your comment. You forgot to note the role of these media hypes like CNNMoney, CNBC, Bloomberg, etc that work with the U.S. Government to help keep the Ponzi scheme going.

Everyone who is telling you about "green shoots" and that prosperty is just around the corner have everything to lose by telling you the truth about what is really going to happen.

PS: I noticed that you got one thumb down. Must be one of those morons from the financial boob-tube networks


On Oct 01 06:33 PM Socialism cannot compete! wrote:

> [quote]
> Federal Reserve Chairman Ben Bernanke, testifying before Congress
> this morning said that protecting consumers from abusive practices
> involving mortgages, credit cards and other financial products is
> "vitally important."
> [end quote]
>
> How about protecting taxpayers from abusive practices by the government???
> This whole thing is starting to collapse -- the attempted prop-up
> has failed -- and when it goes down, we'll be looking up at the March
> lows. Civil disorder will result. And we'll see how Bernanke and
> the rest of the politico-financial elites like what's coming their
> way then. 'Cuz their little pretense at looking out for the consumer
> isn't fooling anyone!!!

Oct 01 07:56 PM

[bottoms-up:]

How do you know that it wouldn't have been a 300, 400, 500 or more dip?

How do you know?

I wouldn't trust the Fed and/or GS one bit.

But it would appear that you have a lot of faith that the markets are not being manipulated. I don't share one bit in your faith...


On Oct 01 07:02 PM H. T. Love wrote:

> Not surprising - the stick saves have really declined the last couple
> of weeks. GS tgt of 1060 on S&P500 was hit, so it's time.
>
> Today there wasn't even an attempt.
>
> HardToLove
>
> On Oct 01 04:44 PM Mark Bern wrote:

Oct 01 07:59 PM

[Swashbuckler:]

Here's my take---I'd call it my two cent's worth, but it may not be worth that much.---The market is headed sideways to higher over the next 3-4 weeks, to shake out the final few shorts. By then, Goldman's locked and loaded to begin the carnage on the down side. When the down trend becomes readily apparent, hang on.

Oct 01 08:02 PM

[JAMES CARLINI:]

It's not a Bull Market or a Bear Market. I said this yesterday and it's even more accurate today - it's a Donkey Market. Different forces are pulling it all different ways so it is stubborn and you hear a lot of "braying experts" saying we're getting into recovery mode but bottom line -- it's wallowing between 9500 and 10,000.

It's like someone is trying to get more money from everyone saying the recovery is here, we've turned the corner, and then when everyone is all in - BANG. The bottom goes.

The key is JOBS. People have good jobs they spend money and the economy takes care of itself. No jobs - no recovery.

Read my instablog -- seekingalpha.com/user/...

Oct 01 08:14 PM

[tripleblack:]

I find it ironic that Bernanke talks about the Fed failing credit card consumers. Think about it. The issuers are getting zero percent dollars from the Fed, and demanding 30% interest rates from their customers...

And Bernie thinks they might have failed to protect the interest of credit card customers?

LOL.

Whew, I swear, this is surreal. The writers for StarGate could never invent this stuff.

Oct 01 08:36 PM

[H. T. Love:]

Obviously you mis-read what I was trying to imply. For a little background and context, see this article and look for the comments from myself and Dialectical Matrialist.

seekingalpha.com/artic...

We're on the same page in the book, but I started scribbling in the margins a bit further back and you missed those pages.

HardToLove


On Oct 01 07:59 PM bottoms-up wrote:

> How do you know that it wouldn't have been a 300, 400, 500 or more
> dip?
>
> How do you know?
>
> I wouldn't trust the Fed and/or GS one bit.
>
> But it would appear that you have a lot of faith that the markets
> are not being manipulated. I don't share one bit in your faith...
>

Oct 01 08:37 PM

[H. T. Love:]

Swash,

Volume has started to tick up on, especially on down days - I *think* the trend is in place, with a few hiccups on the way.

HardToLove

On Oct 01 08:02 PM Swashbuckler wrote:

> Here's my take---I'd call it my two cent's worth, but it may not
> be worth that much.---The market is headed sideways to higher over
> the next 3-4 weeks, to shake out the final few shorts. By then,
> Goldman's locked and loaded to begin the carnage on the down side.
> When the down trend becomes readily apparent, hang on.

Oct 01 08:41 PM

[Windsun33:]

Just a gut feeling, but I am expecting some upside, along with some "donkey days" (nice term btw!) over the next 3-4 weeks. I am expecting a lot of the upticks will come from those days when major stock report decent earnings.

After that, once any euphoria from earnings season start to fade again, and consumer holiday spending proves that it is in the tank, I intend to be nearly all in cash for a while, probably until after New Year at least, maybe longer.

Oct 01 10:50 PM

[Snitzer:]

Inexperience shows; the lowhanging fruit I picked yesterday is dragging the ground today. Shoulda hung off another day, or maybe even a few days. But ya gotta learn somehow, and the value of lessons learned is in direct linkage to the cost of said lessons.

Oct 01 11:36 PM

[marketman54:]

HERE IT COMES:

All of Uncle Sam's balloons are about to pop! Every propped up penny spent in the Financial Markets; Auto Industry; GE; Insurance Industry is gonna blow!

This government and the Wall Street Gang has used and abused the market with Voo Doo Fed Money to give us all a slight of hand view - THINGS LOOK BETTER THAN THEY REALLY ARE!

The SH*T is gonna hit the fan folks.

FINANCIALS - Toxic assets, dirivitives, more foreclosures, credit card and auto loan defaults, commercial real estate defaults....Where is our promised clarity for the banks?????

AUTO INDUSTRY - Wow our government knows how to piss away our dollars. $100 Billion and the bond holders were screwed! Only 9 million units projected, hell GM wasn't profitable when 14 million units were being sold!

FANNIE MAE/FREDDIE MAC - More foreclosures, more toxic assets. Where is the money gonna come from to bail them out?

AIG AND INSURANCE - They are all gonna be down for the count again with no book value!

RETAIL- How can they tell us the crap they tell us about retail sales. There are 25 million full, part time and self employed people out of work buying nothing but food. If you remove 10% of the consumers and all other comsumers are spending less, WHERE DOES THE GROWTH COME FROM?????? How does the economy grow when NO ONE IS BUYING ANYTHING????

HOUSING - Nothing is selling for a profit! There is still a tsunami of residential foreclosures coming down coupled with the commercial real estate foreclosures rolling our way.

They told us that mortgage defaults and lack of consumer spending caused this mess. Both of these are far worse than one year ago and continue to decline on a monthly basis.

There is no recovery yet, there are no green shoots or promising signs until people stop losing their homes and go back to work.

The "LESS BAD IS GOOD" propaganda mentality and the bullsh*t information put out by our government and TOP market analyst have finally found their home.

Watch your money closely, it is time to short this market. The fundamentals have been proving this for months.

Oct 02 01:16 AM

[User 357705:]

Failed? Sure? One can't reverse 25 years of profligate spending on wars and corporate welfare in 8 months. Realism is needed. Certainly can't begin to pay down Duhmerica's debts by reducing receipts further. Civil disorder is coming to a community near you very soon.


On Oct 01 06:33 PM Socialism cannot compete! wrote:

> [quote]
> Federal Reserve Chairman Ben Bernanke, testifying before Congress
> this morning said that protecting consumers from abusive practices
> involving mortgages, credit cards and other financial products is
> "vitally important."
> [end quote]
>
> How about protecting taxpayers from abusive practices by the government???
> This whole thing is starting to collapse -- the attempted prop-up
> has failed -- and when it goes down, we'll be looking up at the March
> lows. Civil disorder will result. And we'll see how Bernanke and
> the rest of the politico-financial elites like what's coming their
> way then. 'Cuz their little pretense at looking out for the consumer
> isn't fooling anyone!!!

Oct 02 07:28 AM

[bottoms-up:]

Thanks for the comment and update. Yes I did miss that...

Sorry... I stand correct and I also stand with you on your views.

I've also taken note that Mark Bern, on another string, supports the view, as I do that we will get a lot of "good news" this coming week in the form of "better than expected" reports that may push the markets up.

One of the most pathetic things I read last week was about the sales of one of the auto companies declining something like 47 percent and it was decried as "better than expected." Not a word about how these companies expect to function anytime in the future sans money from the government boob.

Here... I have a degree in economics, let me give you a prediction... By the end of 2010 75 percent of the United States will be living below the poverty line.

Expect a major rally on January 1, 2011 when CNBC, CNNMoney and Bloomberg report that the actual numbers came in at "only" 69 percent living in poverty.

Meanwhile we have dead bodies piling up because nobody can afford to bury the dead -- not the families, cities, counties or states.

The reality: This country is looking more like a developing nation with each day that passes and no candy-coated BS from any administration or Madison Avenue hypesters is going to change that.


On Oct 01 08:37 PM H. T. Love wrote:

> Obviously you mis-read what I was trying to imply. For a little background
> and context, see this article and look for the comments from myself
> and Dialectical Matrialist.
>
> seekingalpha.com/artic...
>
>
> We're on the same page in the book, but I started scribbling in the
> margins a bit further back and you missed those pages.
>
> HardToLove

Oct 03 11:25 AM

[bottoms-up:]

I agree...

In your full comment you asked about the "transparency" that we were promised...

Doesn't this site pass your test:

www.recovery.gov/

I thought it was interesting that the government budgeted $4.5 million for the "Minor and Outlying Islands," but nobody lives there and they haven't spent a dime.

Maybe Nancy Pelosi will use it as pocket change when she needs to move to here new home in the Virginia caves.


On Oct 02 01:16 AM marketman54 wrote:

> HERE IT COMES:
>
> All of Uncle Sam's balloons are about to pop! Every propped up penny
> spent in the Financial Markets; Auto Industry; GE; Insurance Industry
> is gonna blow!
>
> This government and the Wall Street Gang has used and abused the
> market with Voo Doo Fed Money to give us all a slight of hand view//////////////////...

Oct 03 11:35 AM

[bottoms-up:]

Perhaps you should consider a new decade...


On Oct 01 10:50 PM Windsun33 wrote:

> Just a gut feeling, but I am expecting some upside, along with some
> "donkey days" (nice term btw!) over the next 3-4 weeks. I am expecting
> a lot of the upticks will come from those days when major stock report
> decent earnings.
>
> After that, once any euphoria from earnings season start to fade
> again, and consumer holiday spending proves that it is in the tank,
> I intend to be nearly all in cash for a while, probably until after
> New Year at least, maybe longer.

Oct 03 11:40 AM

[H. T. Love:]

On Oct 03 11:25 AM bottoms-up wrote here:

seekingalpha.com/artic...

><snip>
> ... let me give you a prediction...
> By the end of 2010 75 percent of the United States will be living
> below the poverty line.

I'm unbiased as to the timing, but the end result seems to be already approaching. And you *may* have the percentage too low. See the comments between Robert Martorana and myself beginning here

seekingalpha.com/artic...

In that comment I mention polarazition of income distribution and Robert posts a very revealing factoid in his response.

Later he posts an article here

seekingalpha.com/artic...

that is closely associated with the outcome you project.

>
> Expect a major rally on January 1, 2011 when CNBC, CNNMoney and Bloomberg
> report that the actual numbers came in at "only" 69 percent living
> in poverty.

I know that was supposed to be humorous, but the grimness of the truth in the statement prevents even a smile in response. :-((

> <snip>
> The reality: This country is looking more like a developing nation
> with each day that passes and no candy-coated BS from any administration
> or Madison Avenue hypesters is going to change that.

Heck, even the IMF, if I recall correctly, has mentioned that we have many of the attributes of developing nations. The one that sticks in my mind the most is the nature of being "captured by the bankers" in a never-ending debt spiral.

Our best hope at the the moment seems to be such things as the TEA party movement, the recent march on D.C., Ron Paul's efforts (H.R. 1207?) to audit (and eventually abolish) the Fed, and GOOOH

goooh.com/

If they all come together in a "critical mass", we may have the explosive power to unseat the entrenched "criminals" and reclaim the benefits of an effective U.S. Constitution. I don't expect it could possibly happen quickly enough to help short-term, but maybe, as in investing, the long-term benefits can be realized.

HardToLove

Oct 03 06:18 PM