Tuesday’s Market Recap: Sell-Off On Wall Street After Two Days Of Gains

Markets suffered losses today (Tuesday) as investors contributed to a large sell off on Wall Street. Partly to blame was the shift from equities to government securities, driving down the yield on Treasury Bills to zero for some short maturities. The Dow Jones (^DJI) took a 242 point hit closing at 8,691 points on the day. The Nasdaq (^IXIC) also traded down, losing 24 points and closing at 1,547 points. The S&P (^GSPC) lost 21 points to finish at 888 points. These losses come after two solid days of gains in the markets. The Russell 2000 was down 15 points and finished at 465 points. Overseas Japan’s Nikkei 225 (^N225) was up by 0.8%, while Britain’s FTSE 100 (^FTSE) was up 1.89%.

Four-week treasury bills were sold at a rate of 0.0%. Three-month bills are negative which hypothetically means investors are willing to pay the government to hold their own money. These levels have truly never been seen before this financial crisis, showing the fear and desperation in the market.

Corporate news was mostly grim; as Kroger Co. (KR) announced that 3^rd quarter profit fell due to insurance costs from hurricane Ike.

Electronic Arts (ERTS) cut sales and profit estimates for the upcoming year due to slower than expected holiday activity. The video game maker also says it is continuing to drop products in order the cut costs.

Shares of T. Rowe Price (TROW) took a big hit after the investment manager was downgraded to a “sell” by Goldman Sachs (GS).

The Energy Information Administration projects global demand for oil to drop for the first time since the early 1980’s. The EIA cited that economic slowdown are the continuous driving force. Oil prices fell on the NYMEX to $42.07, while natural gas was up to $5.58. Gasoline futures were down as well settling at $1.43, as heating oil dipped to $0.93.

The price of gold gained $0.05, to close at a price of $774.20.

Disclosure: None

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