Dow Drops 175
DOW DROPS 175
The headline: Stocks Lost Ground On Apparent Worry About The Economic Outlook.
Federal Reserve Chairman Ben Bernanke said the economy should grow at a slow pace before recovering later in the year, explains Dylan Ratigan. Although his comments were seen as indicating that more interest rate cuts are likely the Dow closed lower.
Also at a congressional hearing lawmakers and regulators expressed concern that a collapse of the bond insurers--which back the funding for building hospitals, schools and more--could inflict further pain on banks suffering from the mortgage meltdown and lead to higher taxes for homeowners.
Make sure to put collars on your trades, says Pete Najarian, to limit your risk.
WRITE-DOWN THE HATCH
The headline: Financials Sink After UBS Earnings, Lehman Comments Stoke Write-Down Fears.
Financial companies' shares fell after Lehman Brothers cut its price target on Goldman Sachs Group Inc and reduced its first-quarter earnings estimates on several large broker-dealers, Dylan Ratigan says. Lehman expects further sizable markdowns from subprime mortgage securities, leveraged loans and commercial mortgages.
Also, Swiss bank UBS(UBS) has revealed $26.6 billion in exposure to risky U.S. mortgages distinct from subprime loans, increasing its vulnerability to the global credit crisis and sending its shares sharply lower.
I like Goldman (GS), says Karen Finerman. They’re a world class organization, but investors are afraid that they will come out with a write-down and that’s dragging down share price.
Wait until they report - but then it could be time to buy GS, says Guy Adami.
I only think Goldman is a buy, says Pete Najarian, if it dips another $10. But I also think they could have skeletons in their closet.
LAMPERTS CUTS CITIGROUP STAKES
The headline: Hedge fund legend Eddie Lampert Cuts Stake In Citigroup (C) to 19 million shares from 28 million
Smart investors take their losses, says Jeff Macke. He’s smart and getting out of Dodge.
BUFFETT TAKES POSITION IN GLAXO
The headline: Berkshire Hathaway Reports 1.5 Million GlaxoSmithKline (GSK) Stake As Of Dec. 31
That’s a new position for him, says Dylan Ratigan. He also added to his positions in Wells Fargo (WFC) and Carmax (KMX).
I think GSK is setting up for a trade. But you’d have to stay in it for 18 months, says Guy Adami.