Friday, July 11, 2008


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Today's Market Update with...
Ron Romaine, Value Line's Senior Industry Analyst
July 11, 2008 - 4:59 PM ET

Stocks are mixed and interest rates jump on heightened oil and credit fears.

At the close today, four of the five major US stock market indexes had followed counterparts around the world and fallen; the sole exception was the Russell 2000 small cap index, which rose over 4 points, to 674. The Dow Jones Industrials lost 128, to 11,101; the S&P 500 was down 14, to a two-year low of 1239; the NASDAQ Composite had given up 19, to 2239; and the Value Line arithmetic index, the sole equally weighted benchmark, was at a 12-month low of 1916, off 11 points today. Leading the Dow's drop were CVX (CVX), Boeing (BA), JPMorgan Chase (JPM), and American International (AIG), down 3.8% to 4.2%. General Motors (GM) and Caterpillar (CAT) rose 2.4% and 2%, respectively. Amid fears for their survival, S&P members Fannie Mae (FMN) and Lehman Brothers (LEH) tumbled 22% and 16%, respectively, while Anheuser Busch (BUD) rose over 8% on hopes for a takeover by InBev at $70 a share. NASDAQ losers featured Infosys (INFY), United Airlines (UAUA), Baidu (BIDU), and Teva (TEVA), retreating 7.1% to 13.3%. Wynn Resorts (WYNN), Steel Dynamics (STLD), Activision Blizzard (ATVID), and Biogen Idec (BIIB) advanced 2% to 11%.

Adding to concerns for the capital markets if Fannie Mae and/or Freddie Mac were to need help to survive, the near-month crude oil contract hit another high, at $147.27 a barrel, before closing up over 2%, at $145.08. Beside continuing tension in the Middle East over Iran's nuclear program and its threat to block the Strait of Hormuz, oil supplies are threatened by violence in Nigeria and a possible strike in Brazil. Gold rose 2%, to $960.60 an ounce.

Interest rates jumped 10 to 13 basis points, despite the bad news, to 3.94% for the 10-year Treasury note and 4.52% for the 30-year bond.

Have a safe and, if possible, pleasant weekend.

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