Strong financials hide broader weakness. Equities closed down slightly Tuesday after a volatile session during which Dow futures spanned more than 800 points. Nasdaq fell 3.54% to 1,779. Dow -0.82% to 9,314. S&P -0.54% to 998. The Treasury's plan to buy stakes in nine of the largest U.S. banks (see below) bolstered financials, and masked some of the weakness in other sectors - which explains the Nasdaq discrepancy. The Financial Select Sector SPDR (XLF) rose 6.5%. Meanwhile PepsiCo (PEP) lost 12% after it lowered its profit forecast, sending Coca-Cola (KO) down 7.5%. Microsoft (MSFT) dropped 5.5% on concerns over weaker PC sales. Banks welcome deep-pocketed investor. The government unveiled a plan to buy $250B (which will come from its $700B rescue cache) of preferred stock in banks, including $125B in... Bank of America (BAC) ($25B), JPMorgan (JPM) ($25B), Citigroup (C) ($25B), Wells Fargo (WFC) ($25B), Goldman Sachs (GS) ($10B), Morgan Stanley (MS) ($10B), Bank of New York Mellon (BK) ($3B) and State Street (STT) ($2B). The other $125B will be made available to small-to-medium size banks. The shares pay a 5% dividend for the first five years, and 9% after that. Participating firms can't raise dividends for three years and must ask for permission to buy back their own stock. Some saw the deal as skewed in favor of the recipients, giving taxpayers the short end of the stick. FDIC backs up banks. Details of the FDIC's new liquidity gua ...
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Strong financials hide broader weakness. Equities closed down slightly Tuesday after a volatile session during which Dow futures spanned more than 800 points. Nasdaq fell 3.54% to 1,779. Dow -0.82% to 9,314. S&P -0.54% to 998. The Treasury's plan to buy stakes in nine of the largest U.S. banks (see below) bolstered financials, and masked some of the weakness in other sectors - which explains the Nasdaq discrepancy. The Financial Select Sector SPDR (XLF) rose 6.5%. Meanwhile PepsiCo (PEP) lost 12% after it lowered its profit forecast, sending Coca-Cola (KO) down 7.5%. Microsoft (MSFT) dropped 5.5% on concerns over weaker PC sales. Banks welcome deep-pocketed investor. The government unveiled a plan to buy $250B (which will come from its $700B rescue cache) of preferred stock in banks, including $125B in... Bank of America (BAC) ($25B), JPMorgan (JPM) ($25B), Citigroup (C) ($25B), Wells Fargo (WFC) ($25B), Goldman Sachs (GS) ($10B), Morgan Stanley (MS) ($10B), Bank of New York Mellon (BK) ($3B) and State Street (STT) ($2B). The other $125B will be made available to small-to-medium size banks. The shares pay a 5% dividend for the first five years, and 9% after that. Participating firms can't raise dividends for three years and must ask for permission to buy back their own stock. Some saw the deal as skewed in favor of the recipients, giving taxpayers the short end of the stick. FDIC backs up banks. Details of the FDIC's new liquidity gua ...