Market Close
Amazon (AMZN) reported Q4 earnings of $0.48/share in line with consensus and revenues of $5.7B vs $5.37B estimates. They guided Q1 and FY08 higher than estimates and they are still trading down after hours. Starbucks (SBUX) suffering the same fate. After the rate cut announcement, the indices jumped, with the Dow up almost to 12700, but it was turned away and closed down 37 points at 12442. What? You expected some kind of sanity today? Volume to the upside was not impressive, but volume to the downside was high. There’s a rumor that a ratings agency may downgrade a bond insurer today. The only thing we know right now is that S&P has taken action on 6,389 US subprime RMBS and 1,953 CDO ratings. We don’t know exactly what the action is yet.
We think today’s action shows that recession fears and financial institution’s losses are stifling any enthusiasm over Fed rate cuts. There are still too many unknowns going on with those financial institutions and the bond insurers.
