New Year hits stocks

The stock market had a horrific year in 2007, but this year doesn't seem to be much better and more and more worries are about the recession. On Tuesday Wall Street went to another plunging session reflecting the investors' preoccupation regarding the tumbling economy that might affect more than mortgage lenders like Countrywide Financial Corp. Despite investors' effort to take the market higher, the stream of bad news eventually led to the plunge of many stocks. The first one bringing bad news was the National Association of Realtors whose index tracking pending U.S. home sales fell 2.6 percent in November, and then the profitability of Countrywide (its stock plunged 17 percent) and KB Home was contested. Furthermore, the uneasiness reached its peak after the chief executive of AT&T said at a conference that the phone company was seeing some slowdown in its consumer businesses. Therefore it is natural that the Dow and the Standard & Poor's 500 index went down more than 5 percent so far this year and the Nasdaq composite index is down nearly 8 percent, while The S&P 500 index dropped 25.99, or 1.84 percent, to 1,390.19. The Fed is meeting on 29-30 January and the hopes that it will continue its campaign of new rate cuts in order to prevent recession made investors more active. Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., referring to the softness AT&T is definitely seeing new rate cuts. Richard Sparks, senior equities analyst at Schaeffer's Investment Research however thinks that a balanced decision must be taken, so that inflation is avoided. The speech of Philadelphia Fed President Charles Plosser confirmed that the central bank remains open to further rate reductions given the state of the economy and that inflation remains a concern. Ryan Larson, senior equity trader with Voyageur Asset Management stated that the situation is bad: the dollar fell against most rival currencies, gold reached a record above $880 an ounce Tuesday on the New York Mercantile Exchange, while crude prices resumed their climb, rising $1.24 to $96.33 a barrel. Where everything is heading no one knows, but fourth-quarter earnings reports might not even meet expectation. On the New York Stock Exchange declining issues surpassed the advancers by 2 to 1. Stay connected, more to come!

related story: http://news.yahoo.com/s/ap/20080108/ap_on_bi_st_ma_re/wall_street;_ylt=AsV2mSSaDy40vfbGiCzUtZ6s0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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Edited by Iveta Nagyova