Markets traded down again today as investors expected a hefty loss from Alcoa (AA: 10.06, -0.75 (-6.94%)) and the dollar made major gains against the British Pound.  The Dow Jones Industrial Average fell -1.46% to 8,473.97 while the Nasdaq fell -2.09% to 1,538.79 and the S&P 500 fell -2.26% to 870.26.  Oil prices fell -7.86% to $37.62 a barrel as the dollar strengthened against a basket of the world’s currencies today.  Natural gas on the other hand rose 0.44% to $5.54 per Mcfe on supply issues due to the cold weather storm that has hit the United States over the last few days.

Alcoa made major news after the markets closed today as it lost a whopping -$1.49 per share when analysts were only expecting a loss of -$0.10.  Revenue fell -6.6% to $5.7B.  Last week Alcoa announced that it would cut a massive 18% of its workforce, a crippling reminder of where the U.S. and world economies seem to be heading.  Alcoa is the traditional start of the earnings season for the equities market, and this was not a good sign of what may be coming during the rest of this earnings season.  This occurred on the same day that New York Governor David Patterson approved a 30-year power deal that will begin in 2013.

In other news, Citigroup (C: 5.60, -1.15 (-17.04%)) and Morgan Stanley (MS: 18.79, -0.27 (-1.42%)) are still working on a deal to have Smith Barney, Citigroup’s brokerage arm, become a joint venture that would eventually be completely owned by Morgan Stanley.  On rumors that Citigroup would be selling a 20% interest for only approximately $2.7B Morgan Stanley’s stock stood about still while Citigroup was down almost 20%.  Investors seem to be thinking that Citigroup is getting the extremely short end of this stick as Smith Barney is one of Citi’s only profitable units during this economic downturn.  Rumors also surfaced saying that Morgan Stanely would have 51% control of the joint venture and in turn would have control of the voting rights.

A New York City judge today ruled that Bernie Madoff would be allowed to stay out of jail for the time being, enraging many investors that got burned by his $50B ponzi scheme.  Prosecutors attempted to send Madoff to jail for sending millions of dollars of Christmas presents to relatives and friends before his assets were totalled.

Please join us tomorrow for the market recap, and have a good night.

- Charles W. Petredis

Disclosure: None