Ruh roh. Dow futures were already struggling due to AIG cash injection problems. This news is not going to help after yesterday, the worst day on Wall Street since September 2001. Futures trading often predict the direction of the market (up or down) for the day. Hours ago Dow futures were in positive territory until AIG financing problems were raised. When Goldman released this news, the futures dropped from around -40 to well over -130. The darlings of Wall Street missed their number by 70%, which will make the market nervous since Goldman and JP Morgan are supposed to be the best performing and most stable players on Wall Street. Wall Street generally dislikes small misses and 70% shortfalls often causes shocks to the market. The market is looking for anything positive to grab onto to keep it afloat so between the news from AIG and now Goldman, we could see another day of selling, forcing the Dow lower and creating even more concern about the direction of the economy.
The Fed and Treasury can do little to stop this slide. Until the Republican housing bubble stops - and that is anyone's guess - this economy will continue to shed profits and jobs. What the market needs now is stability and then profits. Neither is anywhere near which means a painful second half to 2008 and either negative growth or very slow growth in 2009. After a lifetime of voting against market regulation, who really thinks McCain is up to the task of fixing Wall Street and correcting the economy?
Goldman Sachs reported third-quarter earnings Tuesday of $1.81 a share ,sharply below Wall Street expectations.
Goldman Sachs shares fell 8 percent in premarket trading as financials continued their broad fall in the wake of the Lehman Brothers bankruptcy, the takeover of Merrill Lynch, and the perilous capital standing of American International Group.
Analysts were looking for Goldman to post earnings of $6.13.
