Stockwatch - September 2007<br>Stocks Crumble on Lending Woes
Although
consumer confidence reached a six-year high on the last day of our trading
session ended July 31, 2007, that news meant little to investors as Wall Street
sent the stock market sharply south on worries that the meltdown in the
subprime lending sector will lead to tight credit across all markets. Although
stocks attempted to rally, those efforts were wiped out after mortgage lender
American Home said it may become insolvent. “That’s the big news that’s hitting
the markets today,” said Sam Rahman, Portfolio Manager at Baring Asset
Management Inc. “It is raising concerns about the whole mortgage market because
American Home really didn’t do anything in subprime. The fact that they’re
having problems trying to unload some of their debt means that the subprime
issue is larger than feared,” Rahman said.
Those fears edged into the PCI Manufacturers’ Index,
cutting into it by 11 points, or 0.79 percent, to end at 1388.88. Despite the
loss, advancing issues edged past declining issues by a 5-to-4 count. Imperial
Chemical Industries-ICI-ceased trading on the NYSE, moved to the Pink Sheets
and was removed from the index.