Stocks slip as investors push into safe-haven investments; Dell weighs on technology stocks

Investors can't shake their fears that the economy isn't keeping up with the stock market.

Stocks fell for a third straight day Friday as a disappointing outlook from computer maker Dell Inc. suggested that an economic recovery could be uneven. The major indexes all had moderate losses, leaving the Dow Jones industrials with a slim 0.5 percent weekly gain while broader indexes slid.

The market, which has been shuttling between concerns about the economy and traders' need to find high-yielding investments, is back to worrying about the economy. Demand for safe haven investments like Treasurys and the dollar rose for a second day in response to Dell's outlook and comments from European Central Bank President Jean-Claude Trichet, who said the ECB plans to start reining in some of its stimulus programs. A rising dollar also hit commodities producers and exporters.

The week's trading saw investors, who have been pumping money into stocks because record-low interest rates mean paltry returns for the dollar and Treasurys, change that strategy. Many are now questioning whether the massive stock rally this year really has been justified given the soft spots in the economy, and so they've been quick to retreat to safe harbors like government debt and the greenback.

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US STOCKS-Wall St falls on financials' weight; S&P off for Oct

U.S. stocks fell on Friday, led by financial stocks as reports painting a mixed economic picture dented optimism fed by the economy's return to growth.

On the heels of a government report that showed gross domestic product grew at its best rate in two years, Friday's data showed Midwest area manufacturing was strong, but consumer sentiment slipped this month.

The Nasdaq was on track to post its first month of decline in eight and the S&P 500 struggled to end the month in positive territory, evidence of a loss in steam after a rally that drove stocks up nearly 60 percent from lows hit in March.

"The market's had a huge run up and hedge funds and money managers are coming into crunch time," said Tom Alexander, head of Alexander Trading in Savannah, Georgia.

"Those that had these huge gains may have a finger on the trigger, locking in some of those gains."

The Dow Jones industrial average lost 135.58 points, or 1.36 percent, to 9,827.00. The Standard & Poor's 500 Index fell 15.49 points, or 1.45 percent, to 1,050.62. The Nasdaq Composite Index dropped 28.34 points, or 1.35 percent, to 2,069.21.

On the final trading day of the month, the S&P 500 was down 0.99 percent for October. If the index is unable to hold onto the month's gains, it will snap a seven-month winning streak. At midday's levels, the Nasdaq was down 2.7 percent for the month, while the Dow was up 1 percent.

Shanghai set to build Disneyland

The Chinese government could give the green light this week for a multi-billion dollar Disney theme park in Shanghai, a report said Monday.

Quoting an unnamed government official with direct knowledge of the project, the South China Morning Post said the 3.6 billion dollar amusement park had been approved.

"What I can say at this moment is that we will hold a press conference to announce the details of the project in the near future," Han was quoted as saying.

In a statement, Disney said the park had yet to be confirmed although the company and Shanghai officials submitted a proposal to China's central government.

"No deal has been agreed to, no project has been approved," Leslie Goodman, Disney's executive vice president for worldwide public affairs, said in the statement Monday.

Shanghai has been working for almost a decade to land a world-class amusement park, partly to shore up its lagging economic growth compared with other Chinese cities, the report said.

Hong Kong opened a Disney theme park in 2005.

Happy 38th birthday, Walt Disney World!

On October 1, 1971, the Magic Kingdom at Walt Disney World opened officially, as Walt's brother Roy brought the first Disney theme park to the east coast.

Why the Dow is Hitting 10000 Even When Consumers Can't Buy And ...

So how can the Dow Jones Industrial Average be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they’re worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save.

Even more curious, how can the Dow be so far up when every business and Wall Street executive I come across tells me government is crushing the economy with its huge deficits, and its supposed “takeover” of health care, autos, housing, energy, and finance? Their anguished cries of “socialism” are almost drowning out all their cheering over the surging Dow.


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Dow Jones Industrials: A Different Risk Perspective

The chart above shows the use of an over-looked measure for determining the risk of owning equities. The graphic depicts the Ulcer Index as applied to the Dow Jones Industrial Average (DJIA) since October 1928 - which is when easily accessible archived records are available.

The index is sometimes applied as a metric for indicating the strength or weakness of a portfolio manager's performance. Most pertinently it addresses the issue of how the portfolio has suffered in terms of its maximum draw-down. The notion of draw-down is useful for determining risk and volatility of the returns that one would actually experience in holding a portfolio (in this case the 30 stocks of the DJIA). It differs from the more commonly used Sharpe Ratio which is used and is based on the standard deviations of the returns.

In essence the draw-down is the amount which a portfolio loses, tracked on a periodic basis, from its current level in relation to the high water mark of the portfolio's returns. The high-water mark itself is a moving amount and in regard to the DJIA it can basically be seen as a continuous recording of the maximum value of the index that has been achieved as of the date of measurement. From this high-water mark one can calculate the percentage change for each snapshot in time of the portfolio with respect to the current maximum value that the index has attained.


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Bank of America to Pay for Merrill Backstop, Faces SEC Trial

Bank of America Corp., the biggest U.S. bank, said it will pay the government $425 million to cancel an unused guarantee of Merrill Lynch & Co.’s assets and cut reliance on federal support after two bailouts.

The payment would end a dispute over what the bank owes the U.S. for a promise to help absorb losses on $118 billion of holdings, mostly at Merrill Lynch. The federal guarantee helped seal Bank of America’s takeover of the New York-based brokerage after fourth-quarter losses spiraled past $15 billion. While the accord was announced in January, an agreement was never signed and the bank resisted paying.

Bank of America also faces pressure from Representative Edolphus Towns, a New York Democrat and chairman of the House Oversight Committee, who scolded the bank yesterday for missing a deadline to turn over documents sought by his panel. Chief Marketing Officer Anne Finucane plans to meet with Towns to discuss how to provide information “without violating attorney- client privilege,” bank spokesman Scott Silvestri said.


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