每日市场点评 --- March 6, 2008

It was a bloody day on Wall Street. Nasdaq, S&P500 and Russell 2000 all hit fresh 52-week lows while Dow was down by more than 200 points. Unlike previous few days, there was no late day reversal that had lifted the market from its lows. News on the economic front was mixed. The weekly jobless claims, which have worsened since the beginning of this year, actually came better than expected at 351K. But the continuing claims jumped by 29K to 2.83 million, which was the highest level since late September 2005. In a separate report, the pending home sales were in line with expectation. Retailers, meanwhile, reported mixed February sales results. Discount retailers such as Wal-mart and Costco exceeded Wall Street expectations while many mall-based apparel stores had worse-than-expected same-store sales results. However, the news that really drove the market down today came from the Mortgage Bankers Association. It reported that the US mortgage foreclosures rose to 0.83% of all home loans in the fourth quarter from 0.54% a year ago. That was the highest foreclosure level on record. Although the record foreclosure level shouldn’t be too surprising to market observers given the recent turmoil in the mortgage market, it is certainly not a piece of news to cheer about either.

All 10 major sectors were down by more than 1% for the day. The energy sector dropped by more than 2% despite a new record close in the crude oil price. Financials were under pressure throughout the day with many stocks hitting multi-year lows. For example, Citigroup was closed at another 9-year low. Freddie Mac, closed at a 13-year low. And even JP Morgan Chase, which was considered to be a relative winner in the sub-prime crisis, hit a 2-year low. The credit market remained under tremendous stress and treasuries seemed to be the only safe place. Although the Fed is widely expected to cut the interest rate by at least 50bps at its next meeting, traders are increasingly betting that such a cut will not be able to solve the tension in the credit market. The VIX index jumped 12% today and closed at 27.55. But at 27.55, it is still not high enough to trigger a panic-selling rally. Tomorrow we are going to get the most important economic report for the week, the Non-farm payroll report. Indeed, both bulls and bears should pay close attention.