US Stocks Decline led by Financials
There has been talks again of concern on whether the RBA will need to rescue two of the biggest financial companies that holds the majority of mortgages in United States - Fannie Mae & Freddie Mac.
The shares of both companies fell to the lowest levels in almost twenty years and the statement from Barron’s didn’t help when they mentioned that shareholder’s of the two biggest mortgage holders will be wiped out if the Treasury decides to rescue them.
The S&P 500 lost 19.6 points to 1278.60, the DJIA fell to 11,479.39 and the New York Stock Exchange lost 7 stocks for every 2 that advanced. Fannie Mae fell to its lowest price of $6.15 and Freddie Mac fell to $4.39 - its lowest price since 1991.
The S&P 500 lost 13 percent this year as the biggest housing slump since the Great Depression slowed down consumer spending.
Here’s some technical analysis on the S&P 500.
This is the chart of the S&P 500 on the 18th August 2008. It shows a bearish flag formation and has hit the resistance of 1303.8 and fell to around 1278 points.
It finished the day just outside of the bearish support flag but also within the support line of 1278 points.
Should it break through the support line, it may go even further south. This would be interesting to watch and see what happens tomorrow.
As for the Federal Reserve chairman Ben Bernanke, he’s struggling to define which financial institutions he would let fail. Which goes to show, if he’s trying to decide which ones the Federal Reserve would bail out and which ones they would “let fail” - then the Federal Reserve is really saying there is definitely something wrong with the economy, without saying it directly.
What are your thoughts on this?
