Thursday November 6, 2008
Navivest

With the drop in stocks today, the major stock market indices have lost about 10% of their value in just two days.

Today, the Dow fell 443.48 points (4.85%), Nasdaq fell 72.94 points (4.34%) and the S&P 500 fell 47.89 (5.03%).

The losses in the past two trading days in the Dow and the S&P 500 are the largest since October 1987. This erodes more than 50% of the gains that we realized since stocks rebounded from a five-year low that was hit 11 days ago on October 27.

Fueling the drop was news from retailers, which showed that retail sales in October was the worst in 39 years. Walmart was one of the few exceptions. It reported that its sales for October rose 2.4%. This bested even the company’s own internal forecasts. If fuel sales are factored in, sales rose 2.5%, when compared to October 2007.

The good news for traders, is that the big drop in stock sets us up for another near-term bounce, the disastrous unemployment rate numbers that we will be getting tomorrow notwithstanding.

The biggest point decliner in the Dow today was Chevron (CVX), which shed $4.77 (6.37%) to close at $70.11. This was a reflection in the big drop we saw in oil prices today, which continue to fall on concerns that a weakening global economy will lower demand. Crude oil for December delivery dropped $4.53 or 6.9%, to close at $60.77.

Disney lost $1.42 during regular trading to close at $22.81. The shares are further trending lower in after hours trading, after the company reported that its fourth quarter net income fell 13%. Partly to blame was losses attributed to the bankruptcy of Lehman Brothers.

The company is expecting things to worsen consumer spending slows. According to Robert Iger, Disney’s CEO, “Consumer confidence is the lowest we’ve seen in over three decades, and even the best product out there is feeling the effect,”

Tags: Disney Earnings  Economy