Well, the "we will test the lows" question has been answered. We are again near a 90 percent downside day, where 90 percent of the volume was on the downside. New lows on the NYSE expended to the highest level in several weeks, though far below the spikes we saw in October.
The NASDAQ broke the old closing low of 1505.90. We did not break the old closing low of 848.92 on the S&P set on October 27th, but we are very close. Let's not quibble.
Financials again led the market lower. The consensus is that banks will continue to need more capital, and many feel that a new round of dividend cutting is coming. One-third of the financials in the S&P 500 (28 out of 84 companies) have already cut their dividend this year, eliminating $30.8 billion in dividends.
Yesterday an Italian bank, Intesa, dropped 17 percent after reporting poor earnings and they they would not be paying a dividend for the rest of the year.
The lesson there is that many still own bank stocks for their dividend.
Many financials hit new lows, including Citigroup ,American Express , Goldman Sachs , and Bank of America .
There was considerable debate about the G-20 meeting this weekend. Curiously several large European countries have no bank recapitalization program (France, Spain, Italy, and Ireland); many feel they will enact programs soon.
The other source of weakness was commodity stocks, with new lows in AK Steel, US Steel, International Paper, and others.
Retailers new lows: Abercrombie , Tiffany ,Limited ,Liz Claiborne ,Nordstrom ,Macy's .
Finally, even good news can't seem to help our parent company, General Electric. GE Capital announced they now had access to the FDIC's temporary liquidity guarantee program. Under the program, the U.S. Government will guarantee all GE Capital debt issued from the date they became eligible for the program until June 30, 2009. But GE still ended down about 8 percent.
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