Nothing like taking the mystery out of which way the Dow is going to head in the first moments of trading. As soon as the opening bell rang the Dow plummeted, and the drop has continued, totaling roughly 155 points at last check. So, why the drop? Well, the main culprit is a disappointing forecast from Wachovia . The nation's fourth-largest bank stated that it expects loan losses of as much as $600 million in the fourth quarter. The bank blamed the forecast on the continued struggles of the mortgage market, which it specifically called credit deterioration. This news combines with the various write-downs coming from the likes of American International Group (AIG) and Morgan Stanley (MS). Analysts from Deutsche Bank commented while it is unclear if these write-downs are enough, the remaining CDO exposure of $676 million is well below that of the others.
Qualcomm did no favors this morning either, stating that legal woes and increased competition would cause 2008 results to fall under expectations. QCOM is more than 4.5% lower in early trade, continuing yesterday's weakness in the tech sector. In the course of writing this entry, the Dow has rebounded a bit, but it is still more than 125 points lower . . . let's see what the rest of the day holds.