Market Wrap-Up

January 30, 2008

DOW 12442.83 -37.47 (-0.30%) S&P500 1355.81 -6.49 (-0.48%)
NASDQ 2349.00 -9.06 (-0.39%) 10 yr Bond 3.733% +0.075

The stock market opened lower on a weaker than expected GDP report. Fourth quarter GDP came in at 0.6%, when economist has been looking for the economy to grow 1.2%. However, the economy did manage to stay out of recession territory, but not by much.

Altria (MO) $76.50 +0.38 (+0.50%) announced earnings that beat estimates by $0.03 and announced the spin-off of Phillip Morris effective March 28.

Yahoo! (YHOO) $19.05 -1.76 (-8.46%) reported earnings that beat Wall Street estimates, but the street was disappointed with the company’s guidance going forward.

Shares of bond insurers MBIA (MBI) $13.96 -2.02 (-12.64%) and AMBAC Financial (ABK) $10.85 -2.08 (-16.09%) were hit hard today after CNBC reported that Bill Ackman, an activist investor, wrote the NY State Insurance Commissioner stating that the insurers situation is much worse than previously stated.

Additionally, CNBC ran a story stating that a rating agency was going to lower its rating on one of the insurers. Fitch also lowered its rating on FGIC Corporation and its subsidiaries.

The most important news of the day had to be the Federal Reserve lowering rates again. This time they lowered rates 50 basis points to 3.00%. In their statement they did note the slowdown in growth and hinted that they would be open to more rate cuts to keep the economy growing.

The market was higher on the Fed cut today, but lost its steam as traders digested the news about the bond insurance companies. The thought is the problems with the insurers could translate into more billion dollar write downs in the financial sector.

Overall, the rate cut today is very positive for the economy and stocks. With the miserable rates on Treasuries the thought is money will now flow back into the stock market looking for values.