15 Reasons Markets Fell Again

Dow 12,512 S&P500 1,333 Nasdaq 2,803 Gold 1,511 Oil 99

Markets had some ups and downs, but finished slightly lower again. Oil (NYSE:USO) ended the week where it started. Gold (NYSE:GLD) was a winner and retook $1,500.

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Now, for the 15 reasons markets moved this week:


1) IMF Chief Abuses Position. Dominique Strauss-Kahn is facing 7 counts of sexual assault related crimes. Since the man is completely replaceable, we’re not sure why this should matter to markets. Regardless, the juicy tabloid-style news sparked lots of hot air about what will happen to the EU’s handling of the debt crisis. We’re sure they’ll get on fine without ole’ Strauss-Kahn.

2) Tech picked up where it left off on Friday. Clearly, the bubblicious activity in Silicon Valley is cooling a bit. Yahoo (NASDAQ:YHOO) got taken to the shed again — down 4.4% — and fell below the technical $16 mark. Investors are still shocked about the lack of control and awareness regarding major Yahoo assets such as Alibaba. This means people are scared there’s more roaches in the hotel. But Indian internet company Rediff.com (NASDAQ:REDF) has it worse. The company was down over 20% today. Baidu (NASDAQ:BIDU), Google (NASDAQ:GOOG), eBay (NASDAQ:EBAY), AOL (NYSE:AOL), Sohu (NASDAQ:SOHU), and IACI (NASDAQ:IACI) all got slammed as well as it seems traders are working a “short internet” strategy. At least Wall St. Cheat Sheet expert contributor (and Board member) Larry Kramer has some great ideas how Yahoo can preserve their audience and increase cash flow.

3) The US has hit the debt limit. US Treasury Secretary Tim Geithner rang the death knell this morning as the US officially crashed into the legal debt ceiling. Maybe that’s China (NYSE:FXI) has been dumping US Treasuries 5 straight months. Should we be scared? Forbes editor John Tamny gave Wall St. Cheat Sheet an exclusive first look at why irony is dripping from Geithner’s “Economic Catastrophe” rationale for raising the debt ceiling.


1) Hewlett-Packard announced early after a memo leak. As the market rally cools, investors are looking for any sign the weakening economic data will infect stocks. The news out of Hewlett-Packard (NYSE:HPQ) was no help. The tech bellwether was scheduled to announce tomorrow but dropped earnings today after a memo from CEO Léo Apotheker referenced trouble ahead. Investors were spooked and the stock lost over 7%. That won’t be music to John Paulson whose fund has been snatching up shares: “How You Can Invest Like John Paulson After His Latest 13F Filing

2) Economic data was weak. Waiting for housing to make everyone happy? You’ll have to wait for Case-Shiller because today the Commerce Department announced Housing Starts and Building Permits fell more than Wall Street expected. That kept homebuilders (NYSE:XHB) in a red place for the day. D.R. Horton Inc (NYSE:DHI), Toll Brothers Inc (NYSE:TOL), M.D.C. Holdings Inc (NYSE:MDC), KB Home (NYSE:KBH), and Lennar Corporation (NYSE:LEN) all took the red bath. At least traders seemed to push Hovnanian Enterprises (NYSE:HOV) over $2.40 and force a squeeze to $2.50 for a 4.58% gain.

3) Walmart made no promises about a rabid consumer. Remember last month when we said Walmart (NYSE:WMT) CEO Mike Duke knew more than Ben Bernanke about the weakening state of the American consumer? Today Walmart announced earnings and proved US consumers are getting fatigued (for now). At least international sales continue to pull their weight.


1) A few solid earnings reports hedged the recent disappointment. Hewlett-Packard (NYSE:HPQ) scared investors with a weak outlook, but rival Dell (NASDAQ:DELL) shot back with better data (although both companies showed the PC weakening). Then Staples (NASDAQ:SPLS) dropped some nasty news about office supplies, only to have Deere (NYSE:DE) remind everyone why Jim Roger’s said farmers will be driving Lamborghinis. If you enjoy a solid Cheat Sheet of valuable information, don’t miss our newly released Dow 30 Quarterly Earnings Season Recap.

2) The US Congress can’t even agree to end Gas company welfare. I’d say that’s simply a sign to all investors and traders that if you have enough lobbyists, you can do whatever you want. Risk on!

3) The Fed may have the same impasse over tightening monetary policy. And you know what that means … free, I mean cheap, money will be here forever! Risk on!


1) LinkedIn shot the moon. Ah, how history repeats. If you thought you’d never see another momo tech stock with a P/E ratio above 1000, today LinkedIn (NYSE:LNKD) proved you wrong. (Don’t Miss: “LinkedIn Now has a Price-Earnings Ratio Making Pets.com Blush“) That’s right. The social media craze has officially gone mainstream with the largest IPO since Google (NASDAQ:GOOG) … and at these valuations it’s going to end ugly (like the dotcom bust) unless you think this time is different. The good news is the social media bubble is probably just getting started.

2) Citigroup is throwing money at Vikram Pandit. Bailout? Over. Crisis? Over. That means it’s time for the captain of a welfare recipient to open his mouth and receive the cash-o-la. Citigroup (NYSE:C) CEO Pandit is going from a $1 a year salary to a retention package worth $23.2 million. Moral hazard? A new niche for CEOs? Maybe it’s merely a stepping stone to the IMF throne.

3) Existing Housing sales sucked. Existing housing sales dropped 12.9% year-over-year, and the National Association of Realtors is blaming lending policies on their woes. If you think government should exist to help real estate brokers turn shelter into a casino game, you’ll love the NAR’s new campaign to eliminate “hurdles” to sales commissions.


1) Retailer earnings are flowing in and input costs are crushing margins. Last night Gap (NYSE:GPS) reported earnings and the stock got folded 17%. Although there are store-specific problems, higher cotton costs are going to keep retailers (NYSE:XRT) from enjoying the summer and possibly beyond. This theme was reiterated by Aeropostale (NYSE:ARO) and The Wet Seal (NASDAQ:WTSLA).

2) Two milestones were overtaken in the background. If you are still bitter Bill Gates stole IP from IBM to create Microsoft (NASDAQ:MSFT), revenge is yours. Today IBM’s (NYSE:IBM) market cap finally eclipsed Microsoft. IBM is now worth over $208 billion while Microsoft remains in the lowly high $207 billion range. On another note, streaming video company Netflix (NASDAQ:NFLX) now has more subscribers than Comcast (NASDAQ:CMCSA) — making Netflix the king with more subscribers than any U.S. cable or satellite provider.

3) Let’s face it: LinkedIn! LinkedIn (NYSE:LNKD) may be trading at twice the price it was less than 48 hours ago, but it still got off to a positive start this morning. Unfortunately for shareholders, the irrational exuberance on Day 2 wasn’t the same and the stock was in a downtrend until it closed down 1.23% at 93.09. This could just be some healthy profit taking, or it could be the beginning of a pattern established by other Web 2.0 darlings Demand Media (DMD) and RenRen (NYSE:RENN). Don’t Miss: “LinkedIn Now has a Price-Earnings Ratio Making Pets.com Blush

Fresh Off the Press: Wall St. Cheat Sheet’s newest Feature Trades of the Month!