Two big factors led to the major selloff in the markets today. One of them we have had around each day lately, oil. The other was a new problem for the markets today, the Fed. Minutes from the most recent Federal Reserve meeting made investors believe that the Fed may have done everything they can do to help the economy. The old word stagflation came to mind again today as well, with oil prices hitting a staggering $134 a barrel after rising more than $5 a barrel. The overall uncertainty was more than the market could take. The Dow lost 227.49 points today. The Nasdaq fell by 43.99 points. The S&P 500 slid 22.69 points, or 1.6% on the day.
The weakness was very broad based today. Energy stocks were very mixed, with some hitting new highs early in the day before settling lower, but the rest of the market plunged.
Basic material stocks showed some significant weakness today. The fertilizer and agriculture plays that have been so hot were hit quite hard. Monsanto (NYSE:MON) fell 4.08% on the day. Potash (NYSE:POT), which just recently hit a new 52 week high, lost 3.96% today. The Mosaic Company (NYSE:MOS) and Terra Industries (NYSE:TRA) fell by 4.92% and 7.84% respectively. United States Steel (NYSE:X) shares settled 4.3% lower after hitting a new 52 week high this morning.
Consumer cyclical names, including retailers, were hit hard today. Coach (NYSE:COH) fell 5.07% on stronger than average volume. Fossil (Nasdaq:FOSL) plunged 6.54% on double its normal daily volume. Goodyear Tire and Rubber (NYSE:GT) fell 3.7% in today's trading session. Kohl's Corporation (NYSE:KSS) shares fell 4.72%, continuing their recent downtrend. Macy's (NYSE:M) fell 5.62% and Chico's FAS (NYSE:CHS) plunged 6.6% to round out some of the major losers in the retail group today.
Financials also belong in the category of stocks hit hard in today's session. Some of the hardest hit stocks from the credit crisis were crushed again today. MBIA (NYSE:MBI) lost 10.67% on strong volume. Indymac Bancorp (NYSE:IMB) lost 8.42% today and is now down to a measly $1.74 a share after trading at $37 less than a year ago. Discover Financial Services (NYSE:DFS) shares slid by 4.58% in today's session. Regions Financial (NYSE:RF) and National City (NYSE:NCC) were leaders to the downside in the weak regional bank sector. RF shares lost 4.21% and NCC shares lost 1.88% on the day, both are now trading near 52 week lows. Capital One Financial (NYSE:COF) shares fell 3.58% on average trading volume.
52 week lows
- Northwest Airlines (NYSE:NWA) Northwest plunged 17.49% to a new low as part of the bloodbath in Airline stocks today.
- Skywest (Nasdaq:SKYW) Another victim of the bloodbath in the airline sector, this one lost 7.51%.
- Whole Foods Market (Nasdaq:WFMI) Lost 3.41% and hit a new low, this one has fallen a long ways from being a darling of the street just a couple years ago.
- Boyd Gaming (NYSE:BYD) This gambling group has just been crushed, and Boyd has now fallen from $53 in July to $16 now.
The oil execs were once again on the hill today speaking with members of congress about their record profits and the surge in oil prices. Right on cue oil prices surged to over $134 in extended hours trading today after supplies were suprisingly weak. The extent of the run in oil in the past few weeks is nothing short of amazing and I fully expect we will see plenty of fallout in the coming months.
The Fed minutes, which can be read in their full text here, were very interesting. The Fed upped its inflation projections and unemployment estimates. Some of the Fed members were starting to believe that price stability should be a main goal at this point and that inflation expectations weren't in line with reality. The Fed also signaled that it believes the labor market will remain weak in 2009, which certainly didn't help stocks today. The minutes are a good read, I suggest you look at them for yourself.
The market seems to be braced for more bad news now, so we'll see if the market can get out of its own way in the next couple sessions.
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