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Nothing to Smile About
by Portfolio Staff
Jun 26 2008
Jun 26 2008
Oil spikes and stocks plunge. Is the economy really out of the woods?
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A global financial services holding company, which provides a range of financial services to consumer and corporate customers. View More
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An investment banking, securities and investment management firm, which provides a range of services worldwide to a diversified … View More
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The Company is engaged in the development, production and marketing of cars, trucks & parts. It develops, manufactures & … View More
For equity investors, the first half of 2008 will officially be remembered as a wash.
The Dow Jones industrial average fell 358 points today, bringing it to a new low territory for the year, and its lowest level since September 2006. The S&P 500 and Nasdaq indexes also fell, but they both remain above their lowest points for the year so far.
A fresh round of concerns in the financial and automotive sectors fueled the sell-off.
Goldman Sachs analysts downgraded shares of Citigroup, which fell more than 5 percent. The research analysts predicted that Citigroup will post another $8.9 billion in write-downs during the second quarter and will cut its dividend. Goldman also downgraded its view on the entire brokerage sector.
Goldman Sachs experienced some of the pain itself as well, after analysts at Wachovia Bank downgraded its rating on the investment bank due to overall weakness in the capital markets. Its shares lost more than 4 percent.
Shares ofGeneral Motors fell to their lowest level since 1955 after Goldman Sachs issued a rare "sell" rating on the stock. The analysts believe the troubled automaker will be forced to raise capital as the conditions in the automotive market continue to worsen. G.M. shares tumbled more than 10 percent.
Indeed, one of the pressures on the auto industry is the rising cost of oil, which also contributed to the selling frenzy on Wall Street today.
The price of a barrel of oil jumped more than $5 to just past the $140 mark this afternoon after Libya said it may cut its oil production and the president of OPEC predicted prices reaching $150 to $170 a barrel later this summer.
This news comes just a day after the Federal Reserve left short-term interest rates unchanged, but cited inflationary pressures as an ongoing concern, as downside risks to economic expansion seem to have diminished. Plenty of Fed watchers had predicted that it would raise rates during the next meeting in August to combat rising inflation.
But they may reconsider that forecast if these economic concerns continue to mount, making the possibility of a recession a greater worry on investors' minds than inflation.
The Dow Jones industrial average fell 358 points today, bringing it to a new low territory for the year, and its lowest level since September 2006. The S&P 500 and Nasdaq indexes also fell, but they both remain above their lowest points for the year so far.
A fresh round of concerns in the financial and automotive sectors fueled the sell-off.
Goldman Sachs analysts downgraded shares of Citigroup, which fell more than 5 percent. The research analysts predicted that Citigroup will post another $8.9 billion in write-downs during the second quarter and will cut its dividend. Goldman also downgraded its view on the entire brokerage sector. Goldman Sachs experienced some of the pain itself as well, after analysts at Wachovia Bank downgraded its rating on the investment bank due to overall weakness in the capital markets. Its shares lost more than 4 percent.
Shares of
General Motors fell to their lowest level since 1955 after Goldman Sachs issued a rare "sell" rating on the stock. The analysts believe the troubled automaker will be forced to raise capital as the conditions in the automotive market continue to worsen. G.M. shares tumbled more than 10 percent. Indeed, one of the pressures on the auto industry is the rising cost of oil, which also contributed to the selling frenzy on Wall Street today.
The price of a barrel of oil jumped more than $5 to just past the $140 mark this afternoon after Libya said it may cut its oil production and the president of OPEC predicted prices reaching $150 to $170 a barrel later this summer.
This news comes just a day after the Federal Reserve left short-term interest rates unchanged, but cited inflationary pressures as an ongoing concern, as downside risks to economic expansion seem to have diminished. Plenty of Fed watchers had predicted that it would raise rates during the next meeting in August to combat rising inflation.
But they may reconsider that forecast if these economic concerns continue to mount, making the possibility of a recession a greater worry on investors' minds than inflation.
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