Editor’s Note: This fits with the reality of the situation, with housing prices still declining and the country in the middle of a recession/depression, the commercial real estate market is sure to continue to have more losses and that will hurt banks, insurance companies and pensions that held this type of paper on their balance-sheets. I think we are just seeing a bear-market rally on the indexes and we have not seen the true bottom yet. This will just be a “L” shaped recession that will last much longer because of policy that is preventing the market from taking our actors that can not operate in a true market based economy.
News (Bloomberg):
U.S. stocks declined as banks fell after Moody’s Investors Service said commercial property values plunged and Home Depot Inc. retreated following an unexpected slump in housing starts.
Marshall & Ilsley Corp. and Zions Bancorporation lost more than 14 percent following the Moody’s report that showed real- estate prices fell 21 percent in March from a year earlier and predicted additional declines. Home Depot, the biggest home- improvement retailer, slumped 5.3 percent even after beating analysts’ profit estimates as the Commerce Department said builders broke ground on the fewest homes on record in April.
The Standard & Poor’s 500 Index, which jumped 3 percent yesterday for its biggest gain in two weeks, dropped 0.2 percent to 908.13. The Dow Jones Industrial Average declined 29.23 points, or 0.3 percent, to 8,474.85. About 11 stocks rose for every 10 that fell on the New York Stock Exchange.
“Investors are trying to separate who’s in better shape and who’s not among banking companies,” said Philip Orlando, who helps manage $410 billion as chief equity strategist at Federated Investors Inc. in New York. “It’s a healing process and not everyone is ready to fly.”
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