Investors tripped over the bell Monday as banking giant Wachovia (WB) led financials lower on news of a quarterly loss and plan to raise capital through a new stock issue. Markets were able to make up their losses through the week as buyers jumped in as companies met or beat low expectations for earnings season, most notably tech bellwether Google (GOOG), Intel (INTC) and IBM (IBM). Financials moved higher as any news other than catastrophe was viewed as a positive sign, as evidenced by JP Morgan (JPM) and Citigroup (C).
Technically the SPX is standing right at the resistance level of 1390. A move through this level puts 1450 on the radar. Remain cautious, as the dislocation between stock and credit continues to widen.
The Four Sisters Performance
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Wachovia added further concern to financials on Monday morning as the company announced its plans to raise $7 billion in capital and slash its dividend after reporting a Q1 loss of $350 million. This news sent shares of the fifth largest U.S. bank slumping 10% in early trading. (4/14)
Also causing some concern to kick off the week is Goldman Sachs (GS) after the investment bank announced that it sold 100 million euros of senior debt at 65 cents on the euro. This sale marked the largest discount offered by a bank since the beginning of the credit crunch. (4/14)
Blockbuster (BBI) added some M&A activity to the market on Monday as the company offered to purchase retailer Circuit City (CC) for a 54% premium over Friday`s closing price. (4/14)
The labor department released their CPI and PPI results for the month of March this week. CPI saw a gain of 0.3% and a core rate increase of 0.2%, as higher energy prices were the main driver of the index’s move. PPI also jumped higher as it posted a gain of 1.1% and 0.2% rise in the core rate. Climbing food and energy prices were key contributors to the results. (4/16)
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