Stocks Saddled With Modest Losses
06/27/08 - 12:38 PM EDT
Mike Taylor
Updated from 11:18 a.m. EDT
U.S. stocks softened Friday, as traders contemplated the previous day's selloff, record-high oil prices and weakening consumer sentiment. The Dow Jones Industrial Average was recently down 53 points at 11,401, and the S&P 500 was off a point to 1272. The Nasdaq was losing 11 points at 2310. The U.S. indices were rocked Thursday, in no small part because of a Goldman Sachs downgrade of the domestic investment banks and the firm's negative comments on Citigroup (C Quote - Cramer on C - Stock Picks) and General Motors (GM Quote - Cramer on GM - Stock Picks). Goldman's comments combined with weakness in Research In Motion (RIMM Quote - Cramer on RIMM - Stock Picks) and Oracle (ORCL Quote - Cramer on ORCL - Stock Picks) worked to create conditions for a steep selloff. The Dow plunged 358.41 points, or 3%, and ended at 11,453.42, its lowest level in more than a year. The S&P fell 38.82 points, or 2.9%, to 1283.15, and the Nasdaq slumped 79.89 points, or 3.3%, to 2321.37. "The markets are puking because the Federal Reserve can't be called to help them out. The Federal Reserve is powerless. They have the kryptonite of soaring inflation and the credit crisis," said Richard Yamarone chief economist Argus Research. Ahead of the new day, Lehman Brothers said Merrill Lynch (MER Quote - Cramer on MER - Stock Picks) could be facing another $5 billion in writedowns because of its exposure to the bond insurers. Meanwhile, insurance firm AIG (AIG Quote - Cramer on AIG - Stock Picks) is bracing for as much as $5 billion in losses related to subprime mortgages, Bloomberg reported. Among earnings, homebuilder KB Home (KBH Quote - Cramer on KBH - Stock Picks) posted a widened second-quarter loss that was worse than Wall Street's expectations. Following the prior close, Bank of America (BAC Quote - Cramer on BAC - Stock Picks) announced it would eliminate 7,500 jobs after merging with mortgage lender Countrywide Financial (CFC Quote - Cramer on CFC - Stock Picks).
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