No bulls are in sight today for the markets or exchange traded funds (ETFs). The Dow Jones industrial average and it’s ETF counterpart DIAMONDS Trust, Series 1 (DIA) dropped more than 200 points, and the S&P 500 and its ETF twin SPDRs (SPY) fell 1.8%, dipping it below its trend line where it’s hovered for most of August. Ongoing credit concerns related to the subprime industry’s problems and stocks’ volatility are the likely culprits behind the drop, reports Joe Bel Bruno for the Associated Press. Wal-Mart’s (WMT) lower-than-expected earnings report didn’t help either. Home Depot (HD) said the housing and homebuilding sectors’ weakness has negatively impacted its earnings as well.
The extreme market volatility has also affected buyouts that have been popular lately. As credit markets are tightening, the number of large corporate buyouts could dramatically slow, according to David Cho and Thomas Heath for The Washington Post. If some buyouts don’t go through, it could increase anxiety in the markets further, making it even more difficult for companies or individuals to get loans.
For full disclosure, some of Tom Lydon’s clients own DIA.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.