This is The Wall Street Digest Hotline Update for Friday, October 19, 2007, at 6:00 p.m. EST.
Third-quarter profit worries and lowered expectations for the fourth quarter sent stock prices plummeting today, with all major indices closing at their lowest levels of the day. At the close, the Dow plunged 367 points, closing at 13,522; the Nasdaq sank 74 points to 2,725; and the S&P 500 closed 39 points lower at 1,500 points. After hitting an all-time high of $90, oil closed down $0.87 to $88.60 per barrel, a 6-percent gain for the week, and gold closed $0.30 lower at $768.40 an ounce.
Despite another spectacular earnings report from tech-leader Google, the markets overwhelmingly reacted today to lowered third-quarter earnings and expectations, cautious fourth-quarter guidance, ongoing worries in the financial and energy sectors, overbought technical conditions, and options expiration.
Ironically, today’s sell-off coincides with the 20-year anniversary of the Black Monday crash that erased more than 500 points, or 23 percent, from the Dow in a single session. By comparison, today’s 366-point drop on the Dow represents a minor 2.6 percent loss, the Nasdaq’s 74-point drop represents only a 2.7 percent loss, and the S&P 500’s 39-point drop represents a 2.6 percent loss.
Record global liquidity is producing a global boom unlike anything we’ve seen before. China, India, Brazil, Asia and the emerging markets are leading this greatest of all bull markets. China’s money supply is growing at better than 18 percent annually. The August 2008 Summer Olympics in Beijing is the driving force behind a massive expansion effort to convince the world during the telecast of the Olympics that China is a global super power.
Stay fully invested! Stock prices in China, India, Asia and the emerging markets will outperform the U.S. stock markets because of the falling dollar. Global/international investments will enhance your investment returns as the dollar declines against other currencies. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Tuesday, October 23, 2007, at 6:00 p.m. EST.