| Market Summary |
Stocks skidded lower in another erratic session Tuesday continuing the abysmal start to the New Year. Investors tried to take the market higher at many points during the day, but eventually succumbed to another stream of bad news. The housing and mortgage markets were again front and center. The National Association of Realtors said that contracts to sell existing homes fell in November by a steeper-than-expected margin. As a result, the group delayed its forecast for a price rebound to 2009. KB Home (KBH: Charts, News, Offers) posted a fourth-quarter loss that ballooned from a year ago due to the housing slump, forcing the company to write down unsold inventory. Rumors that Country Financial (CFC: Charts, News, Offers) would file for bankruptcy protection sent the major averages reeling. The speculation drove the lender's stock lower by as much as 25% and slammed financial stocks. The final blow of the day came from AT&T (ATT: Charts, News, Offers) during afternoon trading. The chief executive of AT&T said that the phone company was seeing some slowdown in its consumer businesses. This news was enough to send stocks tumbling to close in the red.
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| Market News |
KB Home (KBH: Charts, News, Offers), one of the nation's largest homebuilders, said Tuesday its fourth-quarter loss swelled as ongoing housing market woes led to fewer home sales and lower revenue, prompting the company to book charges to write down unsold inventory and for a tax allowance. Its shares tumbled almost 7 percent in afternoon trading. Chief Executive Jeffrey Mezger warned in a prepared statement that 2008 "will be another tough year for the homebuilding industry." The sector has been struggling through the housing slump and the credit crisis prompted by last summer's spike in defaults and foreclosures on subprime home loans made to people with past credit problems. (Source: Yahoo! Finance) Full Story
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Countrywide Financial Corp (CFC: Charts, News, Offers) on Tuesday denied market speculation it might seek bankruptcy protection, after shares of the largest U.S. mortgage lender slid to their lowest level in nearly eight years. "There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company," Countrywide said in a statement. Countrywide shares pared earlier losses following the statement. In afternoon trading, the stock was down $1.05, or 13.7 percent, at $6.59 on the New York Stock Exchange. It had earlier fallen nearly 25 percent to $5.76, its lowest level since March 2000. (Source: Reuters) Full Story
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Merrill Lynch & Co. (MER: Charts, News, Offers) named Daniel Sontag, a former stockbroker who's a 30-year veteran of the third-biggest U.S. securities firm, to replace departing Americas brokerage head McIntyre "Mac'' Gardner. Robert McCann, who heads the New York-based company's brokerage division worldwide, announced the appointment of Sontag, 51, in an internal memo yesterday. Last week, McCann announced that Gardner, 46, who had been hired and promoted by former Chief Executive Officer Stan O'Neal, is leaving the firm at the end of this month. McCann's management changes follow the October ouster of O'Neal following a record $2.24 billion third-quarter loss and the hiring of NYSE Euronext's John Thain as the new CEO. Thain, 52, who brought over Nelson Chai, 42, from NYSE Euronext to become chief financial officer, has so far chosen to retain McCann as head of the brokerage division. (Source: Bloomberg) Full Story
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| Market Analysis |
Taking a contrarian view can be a grizzly experience. It is for MKM Partners' economist Michael Darda, who believes all the recent hype in the markets about a recession is overblown. Darda, a frequent business television guest, appeared on CNBC Jan. 2 sporting a new beard. Darda told TheStreet.com that he will not shave the beard "until the recession talk ends or housing recovers, whichever comes first." Darda is a member of a small and increasingly frustrated crew of economists and market strategists who refuse to jump onto the recession bandwagon, despite its increasing popularity. (Source: TheStreet) Full Story
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After four years of double-digit growth, U.S. corporate profits have begun to decline because of the slowdown in the economy. If businesses respond by curtailing investment, the incipient downturn could deepen. Most Wall Street equity strategists predict listed companies will record a profit gain of 4% to 6% in 2008, but this looks increasingly optimistic; the gross domestic product profit measure could be flat or decline. Profits slumped during the third quarter of last year. (Source: Forbes.com) Full Story
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When you're young, the most important thing you can do financially is get off to a good start. Jodi and David Lewis have certainly done that - at least when it comes to their jobs. Jodi, a development director for a nonprofit, was the youngest person ever elected to the Piedmont, Okla. city council. David is a regional manager for a staffing company, has written a book on leadership and was recently named one of the area's "Achievers under 40" to watch. And though he lost a 2004 run for state representative, David says he'd like another try at politics someday. But for this to happen, the Lewises have to shore up their finances. That's because a career in public service could cut David's income by more than half. (Source: CNN Money) Full Story
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