What's to blame for the market pullback this week?
Continued bad news from the financial sector.
Continued bad news from the housing sector.
Crude oil's flirtation with the $100 level.
Concerns that another rate cut may be a while off.
Blame it on the rain. Yeah ... yeah.
Sakes alive, it's been an ugly week, right? One of the culprits behind today's pullback is Wachovia Corp. , the latest financial name to line up with write-off news. For its fourth quarter, the banking name which recently acquired brokerage concern A.G. Edwards said it expects to swallow loan losses of between $500 million and $600 million in its fourth quarter. WB officials chalk this up to deteriorating credit, which caused asset-backed collateralized debt obligations (CDOs) to drop $1.1 billion in value during October.
In the wake of its third-quarter report, WB said certain financial markets experienced further deterioration, particularly the markets for subprime residential mortgage-backed securities and for collateralized debt obligations.
As of October 31, Wachovia's exposure to subprime residential mortgage-backed securities totaled $2.1 billion. The bank had $676 million worth of exposure to asset-backed CDOs, down from $1.8 billion on September 30.
So in midday trading, WB is down 1.6% after pegging a new annual low earlier today. At its worst point, the stock was off 5.6%. The Select Sector SPDR Financial Fund (XLF) is showing some restraint, chalking up a loss of 0.13%.