Credit Card Companies See The Fear

CREDIT CARD PROVIDERS EVIDENCE BANK FEARS

Pop quiz: if Bank of America (BAC) loaned its retail customers $3 billion less in the third quarter than it did in the second, what’s that mean for credit card issuers?  Probably – nothing too good.

And, in fact, Mastercard (MA) pretty much validated the spending slowdown with a report from its Mastercard Advisors unit that showed that worried shoppers, seeing the destruction wrought in their bank and retirement accounts, reined in spending fairly dramatically in September.

None of the categories surveyed by Mastercard showed year-over-year growth. Apparel sales declined 6%, with women’s apparel down 9%.  Furniture sales slumped by the widest margin in over five years.

Additional Economic Notes:

  • The middle class is being hit hard by the economic crisis. Families and white-collar professionals are struggling to pay mortgages, buy food and put gas in their cars.
  • Business is up at the Silver Lining Jewelry and Loan in Portland, Ore. Customers are selling everything from jewelry to television sets. The Oregonian newspaper reports that a woman even pawned her diamond wedding ring to help pay for gas and car parts.
  • The Wall Street financial crisis started with symptoms of panic, followed by an infection of fear and distrust. But what drives this type of psychology in the markets, and what might be the medicine to protect against future toxic thinking? Tim Harford, a columnist for the Financial Times, tells Ari Shapiro that the best thing to do is to follow Grandma’s advice: don’t borrow too much and don’t take too many risks.


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Record Drops in Dow

Dow Biggest Point Drops

Dow Jones Biggest Point Drops

Record Drops in Dow and S&P

Monday 09/29/08

Dow      10,365.45    -777.68  (-6.98%)

S&P         1,106.42    -106.85  (-8.81%)

All the major indexes were down more than 6% for the first time since 1998.

Prior to today, the biggest point drops for the Dow and S&P was after the 9/11 attacks in 2001.

The VIX (a volatility index closed at 46.72 Up 11.98 or 34.48%) was at levels not seen since 1998.

Dow biggest point drops

  • 9/17/01 down 685
  • 4/14/00 down 618
  • 10/27/97 down 554
  • 8/31/98 down 513
  • 10/19/87 down 508

S&P biggest point drops

  • 4/14/00 down 83
  • 8/31/98 down 70
  • 10/27/97 down 65
  • 9/15/08 down 59
  • 10/19/87 down 57

NASDAQ biggest point drops

  • 4/14/00 down 356
  • 4/3/00 down 349
  • 4/12/00  down 286
  • 4/10/00  down 258
  • 1/4/00  down 230
© 2008 CNBC.com

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