Archives: 2008 January

The stock market made its third straight weekly loss as the end of 2007 and the first two weeks of trading in 2008 disappoints the bulls.

For those who place high significance on weekly closes the worse is yet to come. 2008 is highly likely to bring large losses to those investors who listen to their stock brokers and to the talking heads for trading advice.

Stocks closed sharply lower Friday on concerns that the credit crunch was affecting consumers. American Express (AXP 43.91, -5.01) sounded the distress alarm after it increased its loan loss reserves due to an increase in defaults and slower card member spending. American Express will take a pre-tax charge of roughly $440 million, which dropped its earnings guidance to far below expectations.

Only yesterday Capital One (COF 12.64, -0.28) warned that they had reduced their profit outlook due to increased loan delinquencies and additional legal reserves. No doubt that the credit card companies are going to be hit hard by loan delinquencies and customer bankruptcies.

Philadelphia Fed President Plosser said today the Fed’s biggest worry is potential weakness in consumer spending. This fear was exacerbated by disappointing same store retail sales, which weighed on the consumer discretionary sector and the S&P 500 Retailing Index.

The stock market started 2008 by getting mauled by a big mean bear to start off 2008 trading.

The New York Stock Exchange wasted no time in kicking off the new year in record style. The Dow fell 220 points, the biggest first trading day of the year point drop in the history of the index and the worst opening percentage loss since 1983. And that’s the good news.

After the sorry NFP report released by the Commerce Department at 8:30 AM Friday, January 4th, the market lost another 260 points plus. Quite a start for the New Year and an ominous sign of things to come.

On Friday the NASDAQ fared even worse in percentage terms. The NASDAQ was down 98.03 points to 2504.65, a jaw dropping, bone jarring, bear market number of 3.77%. This was the biggest one day drop for the tech heavy NASDAQ since the day the market opened after 9/11 2001.

For the first week of the year the Dow dropped 4.2% and NASDAQ was down by 6.4%. This was not a Happy New Year kickoff for investors. For those who believe that how you start the year means something it looks like it is going to be a very tough year.