CLOSING WRAP-UP, Sept. 10

Comments from Fed officials Monday were in the spotlight, but several leaders were somewhat hawkish on cutting rates. Atlanta Federal Reserve President Dennis Lockhart stated that the recent news in nonfarm payrolls should be taken in context with the recently positive reports in retail sales. Of course, we will get data on the strength in retail sales Friday.

Philly Fed President Charles Posser was also hawkish, stating that the Fed could handle problems in the financial markets without changing the overall direction of monetary policy. However, San Francisco Fed President Janet Yellen noted that problems in subprime mortgages have raised risk to the overall economy. Fed fund futures are pricing in a rate cut next week, with the odds even pointing to a 50-basis point cut.

Speaking of the subprime mortgage sector, Countrywide Financial () reported that it is cutting up to 20 percent of its workforce. This news sent CFC shares lower by 5.5 percent to $17.21. CFC shares were as high as $45.26 the past 52 weeks, but did reach a low of $15.

Shares of Intel () rose initially on the session, but ultimately fell 0.47 percent on the session to $25.35. The chip giant raised its revenue and margin forecasts for the third quarter on strong sales of semiconductor products. Ironically, this news came the same day Advanced Micro Devices () released its new chip called Barcelona, made for corporate networks. AMD shares were able to tack on 2.62 percent to $12.94.

The bulls were hoping that some buying would occur Monday following the sharp declines from last Friday. However, concerns about possible terrorist attacks on the 9/11 anniversary tomorrow and the upcoming FOMC meeting next week are keeping traders on the sidelines. Traders also have a speech by Fed Chairman Bernanke to digest tomorrow, which will be closely watch for signs of what the Fed might do.

Jody Osborne
Senior Writer & Options Strategist
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