Stocks Saved the Worst for the Last, Closing at 5-Year Low

It looks like there’s just nothing can stop the stock market sell-off, not even the hint of a rate cut from the Fed (Bloomberg), which usually got investors excited in the past.

Dow Jones

Stock indexes went up briefly at the opening on the news that the Fed Reserve announced that it will buy back short-term commercial papers from issuers. The move was aimed to let people start to lend, so people can borrow, again. However, the initial excitement quickly faded away as traders shifted their focus to the worsening global crisis. At the end of the day, all three major indexes posted deep losses. The Dow Jones fell 508.39 points, or 5.11%, to 9,447.11, the lowest level in more than 5 years. The benchmark has lost more than 1,400 points, or nearly 13% of its value in the past five trading sessions. Year-to-date, the Dow has dropped about 29%, the worst performance in 71 years (Bloomberg). Today’s 508.39-point loss also ranks the 6th on the top 10 largest drops list. Now 4 out the 10 biggest losses happened in less than one month :( The S&P 500 sank 60.66 points, or 5.74%, to 996.23, which is also a 5-year low, and The drop was the S&P 500′s biggest five-day percentage decline since the 1987 crash, and the NASDAQ tumbled 108.08 points, or 5.80%, to 1,754.88.

Of those stocks I own, Bank of America (BAC) plunged 26.34% after the bank, which recently acquired Countrywide Financial and Merrill Lynch, said the profit in latest quarter fell 68% and it will cut dividend by half to 32 cents per share (dividend distribution of BoA was the reason I bought the shares in the first place) to reserve capital and cover losses from the purchases. In addition, the bank also announced it will issue $10 billion common stocks.

There doesn’t seem to be an end in sight.

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5 Responses to “Stocks Saved the Worst for the Last, Closing at 5-Year Low”

  1. Moneymonk |  Oct 08, 2008 at 12:47 pm

    I had to cash out my VISA stock two weeks ago, I could not stand the pain.

    However, I am not touching my retirements funds I can ride out the wave

    Im looking at GE, JNJ and KFT to buy. Their all on sale!

  2. Tim |  Oct 08, 2008 at 1:20 pm

    moneymonk: i’ve been buying more visa stock. thanks for selling yours so i could buy mine. jnj has taken a beating, but not so bad. ge is taking a huge beating. i keep buying all three. you are going to regret having sold visa. they will report earnings 29oct. they are getting caught up in the financial mess, but have little residual exposure to it. all indications are that people are still swiping debit and credit cards and will continue to do so. scoop up visa at a discount right now, since it is under 50 today.

    the daily, oh the largest single day drop, or the 3rd largest day drop, or the whatever, is rather annoying. These one day drops are stupidly pointless. The dow will have fallen nearly 8% in three days. that’s not so huge, but when you think that the dow has dropped about 34% from it’s high a year ago, that is very huge. these stupid oh it dropped 800 points pales in comparison to the over 4000 point drop since last year.

  3. Sun |  Oct 08, 2008 at 7:56 pm

    Moneymonk: I haven’t sold any of my holdings yet, including Visa though it dropped below my purchase price. My theory is that stocks like Visa will bounce back once the current market condition improves. Also I am not in need to use the money now, so I can wait for the rebound, if it happens at all :) If I didn’t sell Visa when it was around $90, it doesn’t make too much sense to sell it when it was around $60. However, I haven’t added any new money into my account either. I am having a little problem making new commitment.

    Tim: It’s not a pleasure to watch stocks drop 5% every day, but I am not really worried about it because I know the current market creates opportunities for the long term.

  4. Tim |  Oct 10, 2008 at 6:55 am

    Sun: you are right, it’s not a pleasure and i’m not a masochist, so i don’t watch it every day. if you have done due diligence and have confidence in your assets, then don’t watch it every day.