Stocks Begin 2008 On A Less Than Great Omen

The stock market is off to a fitful start on this first trading day of 2008, not necessarily a good omen for the year if you believe soothsayers. ISM manufacturing data, released at 10 a.m., took an already waffling market lower.

The Institute for Supply Management index fell to 47.7 percent for December, down from 50.8 percent in November. Economists had predicted 51. ISM shows manufacturing activity and a number below 50 indicates contraction in the factory sector. Buyers stepped into Treasurys, pushing yields lower.

The shrinking dollar is giving a boost to oil and gold. Oil is above $98 per barrelon more violence in Nigeria. Energy Department inventory data, usually issued Wednesday, is due Thursday this week. Gold is up sharply, striking a record of $855.10 an ounce in the spot market.

The latest Investor's Intelligence poll shows bullish sentiment declines to 52.2% from 54.9%, and that bearish sentiment is on the rise to 24.5% from 23.1%. That, from a contrarian view, is sometimes seen as a good sign for stocks. Those expecting a market correction rose to 23.3% from 22.0%.

The big thing to watch today is the minutes from the last FOMC meeting, due at 2 p.m. What we might see in those minutes is hints as to why the Fed turned the taps on big time in the final weeks of the year, and of course we'll watch for any hints on future action.

BlackRock Vice Chairman Robert Doll was on "Squawk Box" this morning, and he, like a number of strategists, is cautiously optimistic that stocks will rise in the year ahead. Too bad that was before ISM data. "That stocks go up is a possibility for the course of this year," said Doll, also Global CIO of BlackRock. "We are going to need to get by without an economic recession and the profits picture, while it looks a little gloomy for now , if we can get through that picture..there's a lot of liquidity on the sidelines."

Doll said stocks are not expensive relative to bonds or even inflation and that could encourage buyers. "If housing and credit drag us into a recession and profits are down double digit percent than we're looking at more bad news" for stocks. Doll says he continues to underweight financials and that they could have more writedowns coming up. He also likes the U.S. multinationals as a play on emerging market growth.

Stocks in the news
Speaking of financials, National City said its cutting its dividend 49 percent and laying off 900 mortgage staff. On a negative note for the deal business, PHH's $1.7 billion buyout unraveled after Blackstone failed to get funding. The mortgage originator was to have been acquired by Blackstone and GE , the parent of CNBC.

Bank of America took a bearish stand on semiconductor stocks, putting a sell on some names including Advanced Micro Devices ,LSI and National Semiconductor . The firm said the cyclical recovery in chips that began last year is over, and it now thinks inventory levels are high. It also sees slowing of global growth impacting the group.

Goldman Sachs is also cautious on the group but says it could be positive if inventories shrink. The firm recommends chip stocks over semi-equipment sector stocks. It recommends Intel among others, but was negative on AMD.

Amazon meanwhile, got an upgrade from Citigroup. Citi put a buy on the stock and said it has one of the best outlooks from among all U.S. internet stocks in the coming year.

Punk Ziegel's Richard Bove defended Citigroup today and said no other financial firm has its global reach. Bove said the future earnings power of Citi is not being recognized by the market after its 45 percent loss in 2007. He recommends buying the stock and says there is no other stock that allows investors to play the world's financial growth better, despite concerns about its dividend and capital position.

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