Reply #70: lunchtime downdate

[ozymandius]

12:04
Dow 12,699.38 Down 153.71 (1.20%)
Nasdaq 2,461.52 Down 27.00 (1.08%)
S&P 500 1,411.61 Down 8.72 (0.61%)
10-Yr Bond 3.844% Down 0.043
NYSE Volume 1,892,053,750
Nasdaq Volume 943,781,250

12:00 pm : Stocks have had a bearish bias throughout the session after warnings from another credit card company fueled concerns that the subprime mortgage fallout may be weighing on consumers. The stock market is trading with a loss, but is off its session lows thanks to a turnaround in financials.

American Express (AXP 44.35, -4.57) increased its loan loss reserves to cover increased customer defaults and forecast a weaker operating environment in 2008, which is fueling fears that the housing crisis is starting to hurt consumers. Yesterday, Capital One (COF 43.32, +0.40) reduced its profit outlook due to increased loan delinquencies and additional legal reserves. The consumer finance group is down 5.4% on the news.

Topping headlines this morning, Bank of America (BAC 39.39, -0.04) is buying struggling mortgage lender Countrywide (CFC 6.60, -1.15) for approximately $4 billion in stock. Yesterday, reports that the two companies were in "advanced" talks sent the stock market higher, but its luster has worn off as both companies trade lower this session.

Despite the mostly negative reaction to the preceding news items, the financial sector (+1.4%) is providing leadership as traders speculate of further industry consolidation and capital infusions.

Washington Mutual (WM 14.51, +0.35) is catching a bid after CNBC reported that the company is in very preliminary talks to merge with JPMorgan Chase (JPM 40.70, -0.63).

The New York Times reports Merrill Lynch (MER 54.47, +2.44) is expected to report $15 billion in losses, which is almost double it original estimate. Merrill is trading higher though, as the report also indicates the company is in discussions to raise about $4 billion to shore up its finances.

Citigroup (C 29.06, +0.95) is higher on speculation it will receive a cash infusion. CNBC reported there are rumors Prince Alwaleed may put $15 billion into the firm.

Eight of the ten sectors are trading in the red, as they did not see much buying interest as financials recovered. Consumer discretionary (-1.7%) is the main laggard on the disappointing same-store results and fears of a consumer slowdown. Telecom (-1.5%) is also a laggard.

In commodity trading, Gold hit an all-time high of $900 per ounce, but has since eased a bit to $897.10. Crude oil is down 0.6% to $93.19 per barrel. DJ30 -140.46 NASDAQ -23.86 SP500 -6.96 NASDAQ Dec/Adv/Vol 1761/1067/837 mln NYSE Dec/Adv/Vol 1806/1218/576 mln