Bear's Woes Wallop Wall Street
03/14/08 - 05:33 PM EDT
Sarina Penn
Elsewhere in the sector, Citigroup (C Quote - Cramer on C - Stock Picks), Goldman Sachs (GS Quote - Cramer on GS - Stock Picks), Morgan Stanley (MS Quote - Cramer on MS - Stock Picks) and Washington Mutual (WM Quote - Cramer on WM - Stock Picks) fell between 5% and 13%.
Lehman, Goldman, Morgan and Bear are all due to report earnings next week. "It seems we're in the eye of the storm," said Dickson. "The question is, how long will this process continue? The Bear news probably won't be the only shock this quarter." Breadth for the session was poor. About 5.26 billion shares changed hands on the New York Stock Exchange and some 2.55 billion traded on the Nasdaq, as decliners outran advancers by a 4 to 1 margin. Amid the angst, Treasury prices were leaping as investors sought a safe haven. The 10-year note was up 23/32 in price to yield 3.44%, and the 30-year bond gained 1-11/32 in price, yielding 4.36%. As for commodities, crude oil hit an all-time high, as it has done every trading session this week, this time at $112.75 a barrel. But it also closed lower for the first time since Monday, by 12 cents at $110.21. "I think over the immediate term it's hard to see the fundamentals weakening enough to penetrate the financial community's obsession with oil," said Richard Mueller, director of the oil practice at Energy Security Analysis. "Crude prices have really disentangled themselves from the fundamentals in the past few weeks." Puncturing the bubble in the short term, he believes, could only happen through "extremely unlikely" events, such as the U.S. government deciding to release oil from the strategic petroleum reserve, or the cooling down of tensions in Nigeria. In the latter case, he noted, that would free up 500,000 to 600,000 barrels of good-quality crude a day. Gold, which reached $1,000 an ounce for the first time on Thursday, careened back above that psychological benchmark to a high of $1,009 before easing to $999.50, up $5.70 from the last close. The Bear situation overshadowed a report from the Labor Department that the February consumer price index was unchanged from the prior month, on an overall and core basis. Year over year, the core number, which strips out food and energy, rose 2.3%, while the headline number added 4%. The core CPI figure, a key measure of U.S. inflation, is the first since November 2006 to show a halt in ballooning month-to-month prices. Year over year, it showed the slowest growth in four months. Inflationary concerns are particularly important for investors at this point as they anxiously await the next Federal Reserve meeting on March 18. The Federal Open Market Committee, the Fed's policymaking arm, is expected to cut the fed funds target rate by as much as 75 basis points. Since last summer, the Fed has lowered rates by 225 basis points in an attempt to reinvigorate the economy. Just days before the central bank gathering, a new Wall Street Journal poll is showing that more than 70% of 51 economists surveyed believe the economy is already in a recession. The respondents, on average, predicted that the unemployment rate will rise to 5.5% by December from the current 4.8%. Elsewhere on the economic docket, the University of Michigan's preliminary March consumer sentiment index registered a reading of 70.5, a full point better than expected, though slightly worse than February's 70.8 reading.
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