STOCK MARKET WATCH, Wednesday December 19

[ozymandius]

Source: du

STOCK MARKET WATCH, Wednesday December 19, 2007

COUNTING THE DAYS
DAYS REMAINING IN THE * REGIME 398 LONG DAYS
DAYS SINCE DEMOCRACY DIED (12/12/00) 2528 DAYS
WHERE'S OSAMA BIN-LADEN? 2250 DAYS
DAYS SINCE ENRON COLLAPSE = 2211
Number of Enron Execs in handcuffs = 19
ENRON EXECS CONVICTED = 10
Enron execs conveniently deceased = 3
Other Arrests of Execs = 54

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES-----------------------------S&P FUTURES

---

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90
Oil - $27.69/bbl
Gold - $266.70/oz.

AT THE CLOSING BELL ON December 18, 2007

Dow... 13,232.47 +65.27 (+0.50%)
Nasdaq... 2,596.03 +21.57 (+0.84%)
S&P 500... 1,454.98 +9.08 (+0.63%)
Gold future... 807.40 +8.10 (+1.00%)
30-Year Bond 4.54% -0.08 (-1.75%)
10-Yr Bond... 4.12% -0.07 (-1.74%)






GOLD, EURO, YEN, Loonie and Silver

---

PIEHOLE ALERT

Heads Up!
Preliminary info on appearances by Bush & Co. throughout the country. Details & links are added as they become available so check back. And if you know more, are organizing something, or would like to, contact [e-mail]

For information on protests and other actions Citizens For Legitimate Government

---

Read more: du

[ozymandius]

1. Market WrapUp: Monetary Policy -- Gravely Compromised

BY FRANK BARBERA, CMT

In last week's update, we noted the high probability of a post-Fed announcement stock market sell off, and what a sell off we have seen. Since last Tuesday, the stock market has been loathe to sustain a rally, even on the heels of two separate Fed announcements which should have engendered confidence. All investors take heed, you are staring at a market that is NOT responding well to “Good News.” Markets that cannot rally on Good News tend to accelerate downward on any type of bad news, and that is the kind of market which appears to be taking shape.

Speaking of bad news, there has been a lot of it making headlines in recent days starting with the report on New Construction of Single Family Homes which was announced this morning. The report revealed that construction slowed to its weakest pace in 16 years in November with Housing Starts falling 5.4% to a seasonally adjusted rate of 829,000, the lowest since April 1991. Starts of Single Family Homes are now down 35% in the past year and have fallen in four of the last five months. In addition, the Commerce Department announced that Building Permits fell for the sixth consecutive month to a seasonally adjusted rate of 1.15 million, the lowest rate in 14 years with Permits falling 34% during the last 12 months. An astonishing figure, the drop off in Permits represents the largest year-over-year decline seen since the recession of 1991. On Monday, the Home Builders Survey was announced at market index reading of +19 for the third month in a row. Compiled by the National Association of Home Builders and Wells Fargo, the reading of +19 is deeply pessimistic, hovering for the third month at a 22 year low.

Even more recently, a number of surveys have pointed toward an expected slow Christmas spending season, with sales of women’s apparel, usually a major bellwether for Christmas spending, already targeting a 6% year-over-year decline. Yet against the wide spectrum of bearish reports, perhaps the most negative report in recent days was the disastrous report on Inflation released in the form of the PPI last week. Soaring at a rate of 7.67%, PPI surged to the highest monthly reading seen since

....

Precisely how does the Federal Reserve now go about easing monetary policy further, when even the cryptic government data is showing a tidal wave surge in domestic price inflation? Your guess is as good as mine, but one thing is for sure; it certainly places Mr. Bernanke in a very difficult position as markets had written off inflation as a concern months ago. Well, guess what? Stagflation has just walked in the front door, sat down and put its feet up on the living room couch. Slow Growth and Accelerating Inflation -- a very bad combination for the stock market which has had hopes pinned on a monetary miracle, a Greenspanian easy money, rate-cutting milieu which now seems about as compromised as a cupcake with no icing, a cop without a gun, a hot dog with out a bun, …well, you get the idea -- gravely compromised. No wonder the market has run into a brick wall of selling with each rally attempt.

http://www.financialsense.com/Market/wrapup.htm

[ozymandius]

2. Today's Report

10:30 AM Crude Inventories 12/14
Briefing Forecast NA
Market Expects NA
Prior -722K

http://biz.yahoo.com/c/e.html

[ozymandius]

3. Oil prices rise in Asian trading

SINGAPORE - Oil prices rose Wednesday ahead of the release of U.S. government data on petroleum supplies expected to show crude stockpiles fell for the fifth straight week.

Crude futures were also supported by a small-scale incursion by Turkey into northern Iraq on Tuesday that raised worries that the conflict would cut oil supplies from the region.

Light, sweet crude for February delivery added 29 cents to $90.37 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.

....

A report later Wednesday by the Energy Department's Energy Information Administration is expected to show U.S. crude inventories fell 1.5 million barrels last week, according to the average forecast of analysts surveyed by Dow Jones Newswires.

But activity at the closely watched Nymex physical delivery terminal in Cushing, Okla., may have a larger impact on prices later in the week. Falling supplies there are seen as a symptom of a tight market, and those concerns ease when Cushing inventories rise, as they have for several weeks in a row.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

4. US foreclosure filings up 68 pct in Nov.

LOS ANGELES - U.S. homeowners increasingly failed to keep up with their home loan payments in November, as the number of foreclosure filings surged 68 percent nationwide compared with the same month a year ago, according to a mortgage research company.

In all, 201,950 foreclosure filings were reported last month, compared with 120,334 in November 2006, Irvine-based RealtyTrac Inc. said Wednesday.

Last month's filings fell 10 percent from October's 224,451.

The last time there was a sequential drop in foreclosure filings was between August and September, when they fell 8 percent.

.....

Experts estimate some 2 million adjustable-rate mortgages are due to reset at higher rates in the next seven months.

http://news.yahoo.com/s/ap/20071219/ap_on_bi_ge/foreclosure_rates

[ozymandius]

5. GM to offer new round of buyouts to hourly workers

DETROIT (Reuters) - General Motors Corp (GM.N) said on Tuesday it will offer a new round of buyouts to some U.S. hourly workers, making way for the automaker to hire new employees at lower wages.

GM said the buyouts, which will be offered to 5,200 of its 72,000 UAW factory workers, will include a combination of early retirement incentives and other programs similar to those offered in 2006.

Under a 2006 deal with the UAW, more than 34,000 workers left GM after accepting buyout packages that ranged from $35,000 to as much as $140,000.

....

Lehman Brothers analyst Brian Johnson estimates the current program would be accepted by about 1,900 employees, netting savings of about $190 million annually.

http://news.yahoo.com/s/nm/20071218/bs_nm/gm_buyouts_dc

[ozymandius]

6. Fed aims to ease credit strains with cash auction

WASHINGTON (Reuters) - Financial markets on Wednesday will pore over the results of an unprecedented $20 billion cash auction conducted by the Federal Reserve in a search for signs it is helping soothe troubled credit markets.

The Fed auctioned off the money on Monday as part of a coordinated move by central banks around the globe to thaw frozen credit markets. It will release the auction results at 10 a.m. (1500 GMT) on Wednesday.

Demand for the funds and how much banks are willing to pay for them will signal how deep financial distress is and how important a role the Fed and other central banks can play in easing strains.

....

A key barometer of the success or failure of the auction will be how the benchmark three-month London Interbank Offered Rate, or Libor, reacts. As a rising tide of U.S. mortgage delinquencies sparked a global credit crisis this summer, interbank borrowing costs jumped to unusually high levels when compared with the Fed's target for overnight lending.

http://news.yahoo.com/s/nm/20071219/bs_nm/usa_fed_credit_dc

[AnneD]

24. That is begining to sounding a bit like....

giving a alcholic a drink. Where, but the printing presses, is this money coming from?

[ozymandius]

7. UPDATE: Big Banks Still Plan SIV Bailout Fund

Bank of America Corp. (BAC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and BlackRock Inc. (BK) said they are committed to launching a rescue fund as one option for aiding troubled structured-investment vehicles.

The announcement comes despite many of the big banks that have backed SIVs taking the vehicle's assets onto their balance sheets to stave off potential further losses and forced sales.

The four firms said Tuesday they plan to start the Master Liquidity Enhancement Conduit in the weeks ahead. Its size will be determined by the needs of SIVs and evolving market circumstances, they said.

A person familiar with the matter told Dow Jones Newswires that syndication of the liquidity facility would be the first stage, followed by a road show to the SIVs that will entail the so-called SuperSIV's structure. That person expects to have a good read of where that facility stands in the next 48 hours, particularly in terms of its size.

....

Helping to organize the so-called SuperSIV rescue fund was one of Treasury Secretary Henry Paulson's first responses to the market turmoil. It was controversial from the start, with some critics saying it essentially represented a bailout for the SIV industry. The banks involved dismissed that notion, saying it would merely provide one more option for SIVs that were in trouble.

http://money.cnn.com/news/newsfeeds/articles/djf500/200712181336DOWJONESDJONLINE000560_FORTUNE5.htm

[ozymandius]

8. Analysts in fantasyland (opinion)

NEW YORK (Fortune) -- Maybe Wall Street analysts are more honest and less compromised than they were pre-SarbOx, but recent events show that they're still awful at their most important job: predicting bad news. They haven't lost their habit of falling in love with the companies they cover and refusing to face unpleasant realities until everyone else has already done so. Now, eight years after they were inflating the bubble, we again have to question whether analysts do retail investors any good.

The latest evidence: Analysts have only just discovered that corporate profits in the fourth quarter aren't going to be nearly as strong as they had supposed a month or two ago. The consensus view going into the quarter was that S&P 500 profits would go up 12 percent to 15 percent, a large jump coming on top of the 20 percent rise in last year's fourth quarter. In light of the credit crunch, the housing collapse, and the towering price of oil, that forecast seemed highly - one might say insanely - optimistic. This it proved to be, but only after the quarter began did the consensus view finally lurch into the real world. Their growth forecast is now about 1.5 percent and still falling.

http://money.cnn.com/magazines/fortune/fortune_archive/2007/12/24/101939717/index.htm?postversion=2007121904

[JNelson6563]

10. Breaking: Analysts about to be hit by Clue Bus

Too funny. The highly paid analysts are about to discover what we Marketeers have known all along. Oy.

Julie

[Robbien]

23. Clue Bus is speeding onto the field. MBIA just got downgraded to junk bond status

Ambac, MBIA Debt Outlook Lowered By S&P; ACA Rating Cut to CCC
http://www.bloomberg.com/apps/news?pid=20601087&sid=ao45BJLS62kw&refer=home

Dec. 19 (Bloomberg) -- MBIA Inc. and Ambac Financial Group Inc., the world's two largest bond insurers, had their credit outlook lowered to negative from stable by Standard & Poor's, while ACA Capital Holdings Inc. had its rating cut to CCC from A.

``The rating actions were prompted by worsening expectations for the performance of insured nonprime residential mortgage backed securities and'' collateralized debt obligations of asset backed securities, New York-based S&P said in a statement.

This speeding clue bus is going to hit everything in range on Wall Street today.

Fasten your seat belts.

[4dsc]

12. Perhaps the consumer spending bubble has burst??

Heard an interesting comment last week on NPR and someone clearly stated that the consumer spending bubble has burst and that was a clear sign this economy is headed downward..

[TalkingDog]

15. But..but.... last week on NPR they had a cardboard box mfg.

who said the economy was GREAT! Because he was making boxes..... lots and lots of boxes....and there was a dial... with a turtle and a rabbit. And the dial was turned all the way to Rabbit lately....

Really......No REALLY!!!!

The economy is JUST FINE !!!!!





My Favorite Master Artist: Karen Parker GhostWoman Studios

[4dsc]

20. I heard the same show

And had a good laugh too..

[AnneD]

22. That isn't a good sign....

people are using those boxes for moving or as new living spaces. I don't think boxes are a good indicator as car repos. No repo-the ecomony is doing well. Repo drivers are having a banner year.

[ozymandius]

30. I saw a man walking down the street, carrying a gas can, wearing no shoes.

Also not a good sign.






I shit you not.

[TalkingDog]

32. Suddenly, I want to cry.

There isn't a place in Hell, that is so removed from the presence of God, to house the bastards living off the misery of the people they are helping to make poor.

I'm not even a Christian and yet I find myself praying devoutly for such a place.

Maybe in my next life my heart will be more forgiving.



My Favorite Master Artist: Karen Parker GhostWoman Studios

[AnneD]

34. As a person of deep spiritual convections, I can assure that ....

there is justice or karma, if not in this life time-in the here after, but believe me there is justice. In the words of Ghandi....

When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible but in the end, they always fall -- think of it, ALWAYS.


While things are sad at the moment, I think on his words and smile.

[ozymandius]

9. Hovnanian's losses quadruple

NEWARK, N.J. (AP) -- Homebuilder Hovnanian Enterprises Inc. said late Tuesday it lost four times as much money in its fiscal fourth quarter compared to last year because of fallout from the housing downturn and an accounting charge.

It was the fifth consecutive quarterly loss for Red Bank-based Hovnanian, which operates in 19 states.

After paying preferred stock dividends, the company reported a net loss of $469.3 million, or $7.42 per share, for the quarter that ended Oct. 31. This compared with a loss of $117.9 million, or $1.88 per share, for the same period a year ago.

Hovnanian said an accounting determination resulted in a $54 million tax expense in the quarter instead of an expected $162 million benefit, for a $216 million swing.

http://money.cnn.com/2007/12/18/news/companies/hovnanian_earnings.ap/index.htm?postversion=2007121821

[Roland99]

14. It's obvious we need another 50bp rate cut.

:eyes:

[NC_Nurse]

11. Love the toon!

Lately I feel like I've been watching a train wreck in slow motion with the subprime/credit mess, congressional
fumbling and shuffling their feet on FISA/torture/war funding, the growing problems in Afghanistan/Pakistan....

Yikes...

on edit: Someday I dream of typing well...

[Roland99]

13. The toon does have an odd, familiar look to it....

http://dyn.pga.com.nyud.net:8090/news/industry/images/image_tigershack-299x224.jpg

[formercia]

16. Pessimism grows among fund managers-Merrill poll

http://uk.reuters.com/article/fundsNews/idUKORM94943720071219

Pessimism grows among fund managers-Merrill poll

By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - Pessimism among fund managers about the economic and corporate outlook reached new depths in December although it has yet to undermine an overall investment strategy that favours stocks, Merrill Lynch said on Wednesday.

The investment bank said that its monthly survey of 195 managers was the among the most downbeat about prospects that it has seen in the survey's more than 6-1/2 year history.

Some 74 percent of respondents said the world economy would weaken over 2008, up from 67 percent in November. At the same time, those expecting corporate profits to deteriorate climbed to 73 percent from 65 percent.

Crucially, 80 percent of fund managers said it was unlikely that company earnings growth in 2008 would be in double-digits.

--snip--

[burf]

17. One in Five Expect to Borrow to Heat Homes This Winter

For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.

Nearly 12 percent of Americans say they will need to borrow money to pay winter heating bills; 9 percent will need to use credit cards to be able to afford their heating bills. The poll, commissioned by CreditCards.com and conducted by GfK Roper Public Affairs & Media, surveyed 1,004 randomly selected American adults by telephone Dec. 7-9, 2007 to gauge their attitudes about energy costs in 2008.

http://finance.yahoo.com/banking-budgeting/article/104038/One-in-Five-Expect-to-Borrow-to-Heat-Homes-This-Winter


I'm sure the credit card companies and Big Oil are going to have some pretty nice Christmas Parties and hand out some pretty hefty year end bonuses.

As far as the little guy, in my estimate, its only going to get worse.

[trogdor]

18. A fillup costs $600.

If you go down to 1/4 tank before calling the oil guy, that's about 200 gallons. That's what we'll use from the start of the heating season in mid-October to some time in January. Six hundred bucks is a pretty big energy bill to be getting all at one time.

We're now at half a tank a week before Christmas, which is good for us because it's been colder than last year. We credit better attention to weatherproofing the house, closing off a fairly large room for about half the day, and our wood stove for the savings.

[kineneb]

27. propane- also expensive

we pay $60/mo on a payment plan, otherwise the last fill-up would have been ~$350, and we use about 3-4 tanks/yr. (we use propane for heating, cooking and clothes drying.) The thermostat is set for 66 deg. because otherwise our propane use becomes expensive.

I wonder what is going to happen to propane prices with this mess.

-Note: Nat-gas is not available in our area. Heating choices are wood, electricity, propane or kerosene.

[burf]

29. We are fortunate

Last year we put in an outdoor wood boiler. We live in the country so have no neighbors to bother and the farm has about 20 acres of woods that has a bunch of downed stuff that burns great. Up until last year we had electric plenum heat and we were on "budget plan" at $500 a month. Its a 80 yr old farmhouse and was colder than a witches entire anatomy. Since putting in the boiler our electric is an actual $150 per month and the house is a lot warmer. We also save on insurance cause we got the indoor wood furnace we once used out of the house. The woods is a lot of work but well worth it in my estimate. I figure we will recoup the cost (about $7000) in less than two years. That includes the cost of a new chain saw.

Every time I hear of the cost of gas and oil going up it reminds me of when Clinton was president and gas hit two bucks a gallon. Comedian Rush Limbaugh and his partner in crime Sean Hannity kept blaming Clinton and saying what we really needed was some guys who understood the energy business int he White House. We can see how that worked out. Seriously, it should be an outrage that people in the "most prosperous country in the world" cannot afford heat, health, and food. Something is terribly wrong.

Please excuse my rant of the day.

[AnneD]

21. Morning Marketeers.....

:donut: and lurkers. Looks like the real bubble that is bursting is the one that has surrounded some of these media types. They have had their heads either in the sand or up their butts, or up Bush's butt for 7+ years. There have been many times during these 7 years that they could have taken actions that would have mitigated this-AND TAX CUTS WEREN'T ONE OF THEM. The haves have been selfishly getting theirs and to hell with everyone else.

WS has been engaged in a giant shell game/ponzi scheme and the MSM have been compliant hawkers and hucksters. These WS rats in suits have extracted much money from the middle class and the middle class has less chances of regaining it in this New Economic Reality. This New Economic Reality is already exerting it's effects. These rats are nibbling away at our 401K and 403B like mice in a grain silo, leaving us with little in our old age. Our children are being sold into wage slavery when trying to better themselves and are having a huge burden of debt placed on them. Even our homes are at risk-even if you do have good credit and a way to pay the loan-your home, as a vehicle of investment has had value stolen from it buy the greed of others.

But all is not totally bad. These WS folks will soon be feeling pain. If I remember my stories from the Depression-the well to do got caught too. I think some folks on WS are starting to feel so personal pain now. I'd look for less Christmas bonuses this year and a crash and but after the New Year. This will have an impact on the elections.

If I have to use a crystal ball, I think this will help John Edwards of all the Dem candidates (as he is preaching the populist message), that is of course unless the DC crowd continues to care more about keeping their power instead of doing their job. Then expect a circular firing squad, and we will run a weak candidate. Of course the GOP have their own problems, but if we as Dem's can't win this one....we need to do away with the DLC and all the facade about being the peoples party.

[PassingFair]

33. I agree with everything you say.

110%

:toast:

[antigop]

19. Families USA reports 1.1million Coloradan families will spend > 10% of income on healthcare in 2008

http://www.familiesusa.org/resources/newsroom/press-releases/2007-press-releases/nearly-11-million-coloradans.html

While much national attention has focused on the uninsured, there is an almost invisible but growing crisis among insured families, as rising health care costs devour an ever-growing portion of their pre-tax income. In Colorado alone, 1,054,000 people under the age of 65, 82.6 percent of whom are insured, are in families that will spend more than 10 percent of their pre-tax family income on health care costs in 2008, according to a report issued today by the consumer health organization Families USA.

In addition, there are 299,000 Coloradans in families that will spend more than 25 percent of their pre-tax income on health care costs in 2008.

Health care is the top domestic concern among voters in the upcoming elections. This new report is designed to project how significant health care costs will be for family budgets when voters go to the polls in 2008.

The Families USA report is the first of its kind to document these costs on a state-specific basis. The key findings in the report show that high health care costs are not just a problem of the uninsured. More and more families with insurance are affected by rising health care costs, and, for many, the burden of these costs has become too great to bear.

[AnneD]

25. Houston-area home sales stay on their downward path

Home sales in the Houston area took another tumble in November, and December is shaping up to be a down month as well.

Single-family sales fell 9 percent last month, marking the third consecutive month with a significant year-over-year decline, according to Houston Association of Realtors data. Meanwhile, pending sales at the end of November were down 5.7 percent, indicating another drop this month.

There was a bright spot, though: The median price for single-family homes rose 1.7 percent to $150,000 last month.

"The drop in property sales, while disappointing, is not unusual at this time of the year and is far from the loud thud being heard in markets outside Texas," Rob Cook, the association's chairman and broker-owner of Robert D. Cook Properties, said in a news release.

<more>

http://www.chron.com/disp/story.mpl/business/5389261.html


While this is familiar to folks on the board, this is the fist time this has been acknowledged. The oil industry has done much to sustain us in this downturn, but builders are starting to realize we are not immune. If you read on it talks about prices being good inside the loop. Land is being snapped up and they are building Mc Mansions. The affordable housing is further out and we don't have a good public transport system. This is the quandry that Hubby and I face.

[AnneD]

26. Texas pensions in 'relatively decent shape'

SAN ANTONIO — Texas is in "relatively decent shape" to cover the pension promises made to state workers, but it's behind most states in planning for roughly $37 billion in future health care costs, according to a report released this week.

"Texas is not treating those as genuine liabilities," said Richard Greene, co-author of the study "Promises With a Price" that was released by the Pew Center on the States. "In this instance, Texas is bucking the trend."

The Pew Center report shows that Texas had enough money at the end of fiscal 2006 to cover 89 percent of future pension liabilities in the Employees Retirement System and Teacher Retirement System of Texas. That was a slight improvement from the 88 percent funding level in fiscal 2005.

The 2006 funding level places Texas among the 30 state pensions that had at least 80 percent funding to qualify as being in "relatively decent shape," according to the authors. In comparison, the national average is 85 percent funding.

<more>

http://www.chron.com/disp/story.mpl/business/5389005.html

Perry was wanting the fund to be opened up to riskier investments. That went over as well as the pregnant pole vaulter:eyes: Watch you money folks.

[antigop]

28. riskier investments? ....um, like, CDOs maybe? n/t

[ozymandius]

31. closing figures and blather to boot

Dow 13,207.27 Down 25.20 (0.19%)
Nasdaq 2,601.01 Up 4.98 (0.19%)
S&P 500 1,453.00 Down 1.98 (0.14%)
10-Yr Bond 4.0700% Down 0.0500
NYSE Volume 3,401,294,250
Nasdaq Volume 1,896,925,500

4:20 pm : It was another whipsaw day of trading for the stock market on Wednesday, with several sizable gains and declines during the session. By the end of the trading day, the major indices were mixed with the Nasdaq closing slightly higher, and the S&P and Dow finishing slightly lower. There were no economic reports, but there was plenty of corporate and Federal Reserve news to keep the market occupied.

Yesterday, Goldman Sachs (GS 204.16, +2.65) topped its earnings expectations, but its stock still finished 3.4% lower. Today, fellow Wall Street firm Morgan Stanley (MS 50.08, +2.01) significantly missed earnings expectations, but its stock finished 4% higher.

Morgan Stanley reported a loss of $3.61 per share for its fiscal fourth quarter, well short of analysts' expectations that called for a loss of $0.39 per share. The larger than expected loss was due to $5.7 billion in additional mortgage-related write-downs, bringing the company's total fourth quarter write-down to approximately $9.4 billion.

Investor disappointment was mitigated, however, after the investment bank said it sold a $5 billion stake to China Investment Corp. to further strengthen its capital position amid ongoing credit market turmoil and weakness in the financial sector.

While market participants were able to find an upside in Morgan Stanley's earnings report, the same cannot be said for earnings reports from General Mills (GIS 57.99, -1.08), homebuilder Hovnanian (HOV -0.96, 11.43%) and, Olive Garden operator Darden Restaurants (DRI 28.60, -7.74).

Standard & Poor's added to today's volatility after lowering its outlook on several bond insurers, which caused a steep decline in the indices around 11:30 ET. S&P affirmed its AAA rating on MBIA (MBI 27.02, -0.68) and Ambac (ABK 27.46, +0.48), but changed their outlook to negative. On Monday, Moody's also affirmed its highest rating on MBIA and Ambac, but stated Ambac's outlook was stable, while MBIA's was negative.

Also, Standard & Poor's cut its rating on ACA Capital to CCC from A. Before the rating change, The New York Times reported that several banks were talking about a possible bailout plan for ACA Capital.

Meanwhile, shares of student loan provider SLM Corp. (SLM 22.89, -5.98), known as Sallie Mae, got pummeled. During the company's shareholder meeting call, management seemed combative, and indicated that it may cut its dividend. A failed buyout of SLM earlier this year has taken a toll on its stock, which is down 60% since July.

Four sectors traded higher, with energy (+0.4%) leading the way for the second straight session. Financials (+0.1%) were providing leadership in morning trade, but managed to finish with only a slight gain following the headlines regarding the Standard and Poor's outlook on bond insurers. Telecom (-1.2%) was the main laggard.

Separately, the Federal Reserve released a press release regarding its Dec. 17 $20 billion 28-day credit auction results. The auction drew 93 financial institution, totaling $61.5 billion in bids. The Fed will lend the money at 4.65%, well above the 4.17% minimum bid set by the Fed and below the 4.75% discount rate. This auction is the first of four, which the Fed enacted in hopes to improve liquidity.

In commodities trading, crude oil (+$1.23 to $91.34) closed higher today after the Dept. of Energy said in its weekly report that inventories fell by a larger amount than most analysts expected. DJ30 -25.20 NASDAQ +4.98 NQ100 +0.1% R2K +0.3% SP400 -0.1% SP500 -1.98 NASDAQ Dec/Adv/Vol 1509/1485/1.86 bln NYSE Dec/Adv/Vol 1793/1391/1.23 bln