The markets opened up the week with a massive pounding, taking it on the chin across all three major U.S. Indicies.  The Dow Jones Industrial Average was down 200.72 to a level of 8,339.01 for a loss of 2.35%.  The Nasdaq Composite was down 3.35% dropping 61.28 to close at a level of 1,766.19.  The Standard and Poor’s 500 Index dropped 28.19 to a level of 893.04 for a loss of 3.06% on the day.  Energy and materials were the two main culprits in the downturn today as crude oil fell to $67.09 a barrel after hours from a price of almost $70.00 at the end of last week.  Gold was trading at $921.40 after hours and copper was hovering around $2.14.

The major news on the day that contributed to the negative sentiment was the updated economic forecast from the World Bank.  The agency revised its forecast for global economic growth, calling for a drop of 2.9 percent this year as the financial crisis bottoms out towards the latter half of the year.  The reason this news spooked investors so severly was because the previous forecast was for a drop of only 1.7 percent this year.  Many analysts argued that this should have already been priced into the markets and should not have come as that big of a shock.

In Washington today, President Barack Obama’s administration announced that it had reached a deal with the large drug makers to have them foot $80B of the bill for healthcare reform over the course of the next decade.  Most of this money will go towards lower and middle income senior citizens who need help with rising healthcare costs.  Analysts view this as an important first step of the plan, but some have said that the administrations current plans for healthcare reform could cost over $700B, leaving the government to front at least $620B over the next few years.  It will be interesting to see how Americans respond to this spending after two bailout packages and the bailout for the financial companies such as American International Group (AIG) [AIG: 1.39, -0.14 (-9.15%)].

Walgreen Co. [WAG: 29.64, -1.79 (-5.70%)] reported earnings today seeing a drop of 9% on the bottom line.  This however was accompanied by a growing top line and news of potentially $1B+ in cost cutting by the drug store operator through fiscal year 2011.  Many investors are looking towards companies such as Walgreens to see if there is any type of bottom forming in consumer spending, something that to this point has definitely not be confirmed.  The company was able to earn $522M or $0.53 per diluted share, down from $0.58 per diluted share last year in the same quarter with a net income of $572M.  Gross margins slipped 0.8% to 27.2%.

Please join us tomorrow for another market recap from Bullish Bankers.  Have a great evening.

- Charles W. Petredis

Disclosure: None.

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