This should be an interesting week. The Dow Jones is at 7300 which is its lowest level since the mid 90′s. Financial stocks as a group are beaten down and the question is, Can they continue to go lower? The government is reportedly thinking of taking a larger stake in Citigroup. The government is expected to announce a plan that will stabilize the banking sector this week.
I will also be keeping an eye on automobile company stocks. General Motor’s market cap is down to 1 billion and the stock is selling for $1.77 a share. Ford may be selling for only $1.58 a share but the company seems to be in better shape than GM. Ford has not yet asked for any government funding and is gaining marker share from GM and Chrysler. Since Ford has not gotten any loans from the government, the company will have greater access to loans than its competitors.
How much lower can these stocks go? Dell is trading for $8 a share and the company announces earnings this week. Dow Chemical is down to $8 a share. At the rate that the stock is dropping the company may be insolvent before it can complete the Rohm & Haas deal. General Electric at $9 is at its lowest levels in 14 years. Can GE drop to $5?
