Bad News Keeps Hammering Markets

How much of the bad news is priced into the stock market? The answer is, the news is still coming in a bit worse than most market participants are expecting.

Toward the close, the indestructible Wal-Mart announced that they were suspending their stock repurchase program due to the economy and credit market instability.

OK, it's not a big deal, there was only $5 billion left in the program to re-buy, and Target has already suspended their program, but it is emblematic of the problem. Dropped 2 percent quickly.

Consider also:

1) Lots of job layoffs announced in the last day (Sony, Molex,Danaher, etc.)

2) Still getting lower guidance/shrinking profits for shippers (FedEx, Con-Way), electronics (Sony, Samsung, Texas Instruments,National Semi), and manufacturers (Danaher).

FedEx the stock of the day: think the lower guidance they provided for the next two quarters, which you could drive a truck through, has been priced in? No! FedEx down 16 percent today, the biggest one-day drop since 1987.

This despite all the tailwinds FedEx has going for it:

1) Jet fuel prices way down;

2) DHL (one of its main competitors) going away.

The FedEx formula is pretty simple:

1) FedEx is a classic early cycle stock

2) If economy turns up in 2H 2009: buy FedEx NOW

3) If no upturn until 2010: no rush

Today it is looking more like 3) than 2).