A Recap of the Day

Here's an update from Monday's action

The markets began Monday with selling from the open with very little break in the downside action all day. The Dow Jones Industrial Average was down nearly 290 (-3.56%), the S&P 500 was down 37 (-4.28%) and the Nasdaq was down almost 65 (-3.88%). The Financials lead the dive, losing over 11% in the sector with Bank of America (BAC -24%) and Citigroup (C -19.45%) hit the hardest.

Investors sank BAC shares and dismissed an almost tripling of its first-quarter profits due to special gains, as its traditional banking business continued to suffer from a weakening economy.

There also was a rumor that "The Turner Radio Network" (not related to Turner Broadcasting in any way) had obtained the stress test results for the top 19 Banks in the US.

The U.S. Treasury said on Monday there was "no basis" for a report that said its stress tests on the health of the nation's 19 top banks showed several were "technically insolvent."

A Treasury spokesman said the department has not yet received the results.

"There is no basis for that report; we do not even have results yet," Treasury Spokesman Andrew Williams said. The Obama administration has said the results would be released on May 4.

This contradicts a report from Bloomberg published on April 10th:

“April 10 (Bloomberg) -- The U.S. Federal Reserve has told Goldman Sachs Group Inc., Citigroup Inc. and other banks to keep mum on the results of “stress tests” that will gauge their ability to weather the recession, people familiar with the matter said. The Fed wants to ensure that the report cards don’t leak during earnings conference calls scheduled for this month. Such a scenario might push stock prices lower for banks perceived as weak and interfere with the government’s plan to release the results in an orderly fashion later this month."

This may be a case of sell the rumor and buy the news. We will see how the market reacts when the official report becomes available on May 4th.