Down With the Financials

The inevitable appears to be happening. Today financial stocks led the broader market down. It was not as ugly as it could have been thanks to a large sell-off in oil which sparked a hundred point rally in the Dow. Regardless, the Dow ended down 42 points, while the S&P 500 and the Nasdaq were both down around 1%. There were two notable occurrences in the market today. First, as mentioned above, the financial stocks led the market down. This has not happened since the huge rally in mid-July began. Also, sliding oil prices could not lift the indexes out of the red. Over the last month or so, any day oil slid, the market popped. Today oil was down 3% and the market could not muster a rally. This does not bode well for the immediate future of the market. There are too many drags for it to go anywhere but down for a while (consider headline inflation, housing prices, unemployment, looming writedowns at the banks, credit card companies looking shaky...).

It will be interesting to see what the Fed has to say tomorrow, as well as Freddie Mac's earnings, which are sure not to be good. I, along with pretty much everyone else don't think the Fed is going to cut or raise rates, but every word of their release will be scoured for a hint of what is to come. I don't want to make a call for tomorrow because the market's reactions on rate decisions days never really make sense to me, but if I was a betting man I would place my chips on red...