Mary Ann Bartels, Bank of America Merrill Lynch’s technical research analyst, has some dire predictions below.
E-Books prices are going up as the publishing industry is trying to access the changes going from Brick and Mortar stores to modern technology.
Here are the top financial stories of the day:
1) Stocks Claw Back-From The Wall Street Journal
Stocks erased a steep loss late in the day amid a report that China may come to the aid of the euro zone.
The Dow Jones Industrial Average closed up 68.99 points, or 0.6%, at 11061.12, its first gain in three days.
It was a volatile session in which the measure fell by as much as 167 points, before an upward burst of 183, or 1.7%, in the final hour of trading. The Standard & Poor's 500-stock index gained 8.04 points, or 0.7%, to 1162.27. The Nasdaq Composite rose 27.10 points, or 1.1%, to 2495.09.
Stocks clawed back into positive territory late in the day after a report in the Financial Times said China was in talks with Italy for "significant" purchases of government bonds, which would help one of Europe's most heavily indebted governments. Earlier in the day, investors had been preoccupied with worries that Greece's sovereign-debt crisis was coming to a head.
"For the Chinese to come in and back their debt [would be] a vote of confidence at a time when confidence is at a shortfall," said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management.
Technology stocks were a source of relative strength throughout the session. Chip stocks fared especially well after Broadcom agreed to acquire NetLogic Microsystems for $3.7 billion. NetLogic soared 16.21, or 51%, to 48.12, while Broadcom shed 38 cents, or 1.1%, to 33.06.
Intel gained 58 cents, or 2.9%, to 20.28, leading the Dow. Micron Technology led the S&P 500, rising 34 cents, or 5.3%, to 6.69.
Meanwhile, stock markets in Europe and Asia ended sharply lower, with some shares hitting multiyear lows, amid fears about euro-zone sovereign debt and a possible Greek default.
Banks bore the brunt of the selloff in Europe, while financial firms and exporters led the declines in Asia. French bank stocks plunged amid worries that Moody's Investors Service could downgrade them this week due to their holdings of Greek government debt.
"Many banks, if they truly write down their Greek debt to where it probably should be, may have a capital problem," said Bernard Horn, president of Polaris Capital Management in Boston.
The Stoxx Europe 600 index ended down 2.5%, at 218.93, having hit an intraday low of 216.76, its lowest level in over two years. The U.K.'s FTSE 100 closed 1.6% lower, at 5129.62. Germany's DAX slumped 2.3%, to 5072.33, falling below the 5000-mark during the session for the first time since July 2009 before recovering. France's CAC-40 closed down 4%, at 2854.81, its lowest point since April 2009.
Japan's Nikkei Stock Average fell 2.3%, to 8535.67, its lowest closing level since April 2009, while Hong Kong's Hang Seng index fell 4.2%, to 19030.54, its lowest close since May 2010. Australia's S&P/ASX 200 lost 3.7%, to 4038.50, Singapore's Straits Times Index fell 2.9%, to 2743.58, and India's Sensex fell 2.2%, to 16501.74. South Korean, Taiwanese and mainland Chinese markets were closed for holidays.
In the U.S., Bank of America Chief Executive Brian Moynihan said the company would save billions through cost cuts in the coming years. The news provided a respite from the drumbeat of negatives on bank stocks.
The shares gained seven cents, or 1%, at 7.05.
NYSE Euronext fell 25 cents, or 1%, to 25.42, after a senior company executive said no private deal has
been struck among European regulators to bless the exchange operator's planned combination with Deutsche Börse.
Global Industries leapt 2.63, or 51%, to 7.78, after France's Technip said it was buying the construction and undersea services company in a deal valued at $1.07 billion.
McGraw-Hill said it planned to separate its markets and education businesses into two public companies and accelerate its share repurchases. The stock rose 1.54, or 4%, to 40.26.
Tenet Healthcare said it now expects 2011 adjusted earnings before interest, taxes, depreciation and amortization to be at the lower end of its previous forecast. Shares fell 50 cents, or 10%, to 4.52.
Online-dating company FriendFinder Networks added 15 cents, or 5.5%, to 2.86. The company plans to pay up to $65 million to acquire BDM Global Ventures in a move that will give it ownership of BDM's JigoCity deals site.
M&F Worldwide jumped 3.88, or 19%, to 24.25. The company agreed to be acquired by closely held MacAndrews & Forbes Holdings.
Darling International lost 40 cents, or 2.6%, to 15.15. Goldman Sachs analysts downgraded their stock-investment rating on the rendering and food recycling company to "neutral" from "buy," citing a lack of near-term catalysts for the stock.
2) S&P Could Fall 20%, 2-Year Treasury Hit 0%: Analyst-From CNBC
Rising risk aversion, a surging U.S. dollar, historical seasonal weakness and a climb in bonds could send the S&P 500 down as much as 21 percent from Friday’s close, according to Mary Ann Bartels, Bank of America Merrill Lynch’s technical research analyst.
The 2-year Treasury yield could drop to zero, Bartels added
“There is still a chance that 1100-1020 holds, but the risk is now higher, or a 50 percent probability, that the S&P [.SPX 1172.87 
10.60 (+0.91%) 
] tests 985 – 910,” wrote Bartels, who is often chosen among the top chart analysts in an annual survey by "Institutional Investor" magazine. “September historically is the worst performing month in the year, while October traditionally marks important market bottoms.”
10.60 (+0.91%) ] tests 985 – 910,” wrote Bartels, who is often chosen among the top chart analysts in an annual survey by "Institutional Investor" magazine. “September historically is the worst performing month in the year, while October traditionally marks important market bottoms.”The S&P 500 is already down 15 percent from its bull market high hit at the start of May. Bartels believes that the benchmark will retest the 1100-1020 area and if it fails there, then look out below. She gets her target in the 900s using a combination of commonly-used factors, most notably a 61.8 percent Fibonacci retracement of the March 2009 to May 2011 rally.
As for bonds, Bartels makes a simple channel around the past highs and lows of the two-year yield. The bottom part of the channel leads right down to zero percent, meaning investors will keep buying these notes and expect nothing in return except their principle. She sees a similar drop in the long-end of the curve with the 10-year Treasury yield going as low as 0.3 percent.
This flattening of yield curve will only hurt banks’ ability to make money on lending over time.
“I fear she is right on point,” said Chris Verrone, a chart analyst for Strategas Research, who correctly got bearish for his clients recently. “The biggest takeaway from me over last few weeks is continued deterioration in credit.”
3) E-Book Prices Prop Up Print Siblings-From The Wall Street Journal
Quote of the Day from Dave Ramsey.com:
Nurture your mind with great thoughts, for you will never go any higher than you think. — Benjamin Disraeli
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