Spending Fears Spank Stocks
01/11/08 - 05:25 PM EST
Robert Holmes
American Express was the worst performer on the Dow, falling $4.92, or 10.1%, to $44.
"This decline was basically about American Express, in that we may have a new problem in credit cards to go along with housing and subprime mortgage problems," said Paul Mendelsohn, chief investment strategist with Windham Financial. "All the fear we felt today isn't completely reflected in the trading." Another Dow loser was McDonald's (MCD Quote - Cramer on MCD - Stock Picks), which shed 6.6% to $54.32 as Friedman Billings said the hamburger chain's stock is fairly priced and predicted that domestic comparable-store sales could slow. In addition, an independent analyst circulated a report indicating that franchisees reported particularly slow growth in December. Tiffany (TIF Quote - Cramer on TIF - Stock Picks) also added to spending concerns, reporting weaker-than-expected holiday sales in the U.S. and trimming its profit targets. Shares tumbled 11.2% to $35.80. Notably weak sectors included retailers and airlines, who slid 3.2% and 3.7%, respectively. Semiconductors lost 2.4%. Meanwhile, a number of financials that have been punished by heavy shorting in recent months appeared to rally on the hopes that salvation might in fact exist, considering Bank of America (BAC Quote - Cramer on BAC - Stock Picks) has agreed to take over struggling mortgage writer Countrywide Financial (CFC Quote - Cramer on CFC - Stock Picks). MBIA (MBI Quote - Cramer on MBI - Stock Picks) jumped 17.6%, Ambac (ABK Quote - Cramer on ABK - Stock Picks) were up 12%, CIT (CIT Quote - Cramer on CIT - Stock Picks) added 8.9%, and Washington Mutual (WM Quote - Cramer on WM - Stock Picks) was better by 3.7%. Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) rose 5.1% to close at $54.69 even though The New York Times reported that the broker will post a larger-than-expected writedown of $15 billion when it reports earnings next week. Shares of Merrill had been down earlier.
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