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Strategies & Market Trends : Sharck Soup
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To: Sharck who started this subject5/7/2001 1:49:17 PM
From: besttrader  Read Replies (1) of 37746
 
13:30 ET Dow -39, Nasdaq -13, S&P -5.39: [BRIEFING.COM] To this point in the trading session we have yet to see real conviction on
either side of the market. Nonetheless, the major indices continue to drift in modestly negative ground. Financials are serving to drag on
both the Dow and the broader markets (S&P Financials -0.8%). Contributing to sector weakness is sell pressure on Dow component JP
Morgan Chase (JPM -3.0%). Prudential has downgraded JPM to Sell from Hold on concerns that a slowing economy could lead to a rise
in bad loans. This raises a separate but similar issue financial institutions face in a falling interest rate environment. There is a contrarian view
which contends a pronounced decline in interest rates hurts financial institutions by reducing the quality of their loan base. The theory is that a
decline in rates forces institutions to take on higher interest rate clients (higher risk) in order to retain the differential on borrowed vs. loaned
funds. Under this view, financials take a double hit in a weak economy as the incidence of loan defaults increases while the quality of the
institutions loan portfolio decreases. DJTA -0.6%... DJUA -1.0%... SOX -0.6%... XOI +0.1%... BTK -0.8%... Nasdaq 100 -0.8%...
S&P Midcap 400 -0.5%... Russell 2000 -0.2%... NYSE Adv/Dec 1427/1497... Nasdaq Adv/Dec 1822/1808.
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