Bank Rumors Dominate The Day
By: Bank nationalization scares dominated the day, we hit our lows as Senator Chris Dodd said nationalization of some banks may be necessary on a short term basis, then rallied midday as the White House downplayed bank nationalization rumors (White House Press Secretary Robert Gibbs said the U.S. "will continue to have" a private banking system), and we reported that the Department of the Treasury will provide details on the bank rescue plan next week.
Regardless, stocks still drifted lower in the final hour, even though Congressman Barney Frank said in a Bloomberg interview that he "doesn't see any likelihood now" of bank nationalization.
The Dow finished with the worst week since October.
A brief recap: on Tuesday the S&P 500 closed below 800 for the first time since November, as the dollar rallied to a 3-month high.
On Wednesday, January housing starts came out at the lowest levels since record keeping began in 1959, some homebuilders hit multi-decade lows.
On Thursday, the Dow closed at its lowest level in over 6 years, triggering a Dow Theory sell signal,as both the Dow Industrials and the Dow Transports hit new lows.
Banks: what are they worth? I'll make it simple: the market capitalization of ExxonMobil is $354 billion. The market capitalization of all 24 stocks in the Philly KBW Bank Index is $269 billion.
This week: Dow down 6.2 percent, Dow Transports down 8.7 percent, S&P 500 down 6.8 percent, NASDAQ down 6.0 percent.
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