U.S. stocks and exchange traded funds (ETFs) were in the red for the first time in five days on concerns of conditions in the financial system and the ambiguity of first quarter earnings.
Many banks were downgraded and shares declined in large amounts on news that the federal government’s measures to bail out the financial institutions may not be enough. The biggest concern is that loan losses will exceed levels from the Great Depression, states Rita Nazareth of Bloomberg.
To help the ailing banks, the Treasury has further extended its deadline for its toxic asset program, which will enable hedge funds and other private investors to buy up “bad” assets with some help. Unfortunately, this measure still hasn’t fired much of a spark. The Financial Select SPDR (XLF), was down about 3% in intraday trading, and is down 22.6% year-to-date.
To add to the negative news on Wall Street, the alleged acquisition of Sun Microsytems (JAVA) by IBM (IBM) has came to a halt. Those familiar with the talks claim that pricing and regulatory issues are making the deal complicated.
Many investors are sitting on the edge of their seats grinding their finger nails waiting to see how well or poorly U.S. companies did in the first quarter of 2009, as earnings season is about to be underway. Tomorrow, the season will be kicked off by earnings reports by Alcoa (AA) and Dow Chemical (DOW).
Oil has been riding the coat tails of the market. Benchmark crude oil for May delivery was down $1.17 in morning trading, hovering at $51.34/barrel on the New York Mercantile Exchange. The gains seen by black gold over the past few weeks have been fueled by optimism brought on by the world leaders at the G-20 summit, the entrance of speculators into the market and basic supply and demand influences. It is just a matter of time until crude plays with a resistance mark and oscillates back and forth. United States Oil (USO), was down about 2% in morning trading.
The Dow Jones Industrial Average slipped 0.8%, the S&P 500 was down about 1% and the MSCI World Index of 23 developed nations retreated 1% in morning trading.
” Kevin Grewal contributed to this article.”