Slowly, stocks rebound from Lehman bust
The Lehman Bros. collapse, two years ago today, set off a huge stock market crash. While much of the market still hasn't recovered, there are winners.
The global economy is starting to recover, spurred on by massive government spending in China and stimulus efforts in the United States and other countries. But the severity of the downturn -- the worst since the end of World War II -- that the recovery has been frustratingly slow.
then-Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke. Neither has conceded the point, arguing that the government legally couldn't have saved Lehman.
Lately, Bernanke has said that even if the government could have stepped in to prop Lehman up, it was in such deep trouble it would have died anyway.
The short-term financial damage was staggering.
On Sept. 15, 2008, the Dow Jones industrials ($INDU) fell 504 points. Between Sept. 12, 2008, the Friday before the Lehman collapse, and the March 9, 2009 market bottom, the Dow fell 42.7%, with the Standard & Poor's 500 Index ($INX) off 46% and the Nasdaq Composite Index ($COMPX) off 43.9%.
The Russell 2000 Index ($RUT.X), which tracks smaller stocks, fell 52.3%.
The Dow is still off 8% from the Sept. 12, 2008 close, with the S&P 500 down 10.4% and the Russell 2000 down 9.8%.
The Nasdaq and its sister index, the Nasdaq-100 Index ($NDX.X), which tracks large Nasdaq stocks, have recovered all of their losses since the Lehman collapse. The Nasdaq is up 1.4%; the Nasdaq-100 is up 9.3%.
Most of those gains are due to the huge gains realized by Apple (AAPL), SanDisk (SNDK), Starbucks (SBUX), up 92%, 86% and 175%, respectively, since the Sept. 15, 2008 close.
We asked Howard Silverblatt of Standard & Poor's for the best and worst S&P 500 stock since the Lehman failure. Here's the top 20 winners and losers as of Tuesday's close.
|Winners and losers since the 2008 Lehman Bros. collapse|
|Tuesday||Chg. Since Lehman|
|Citrix Systems inc||$67.40||145.27%|
|Red Hat inc||$38.60||116.49%|
|Whole Foods Market||$35.50||96.13%|
|Bank of America||$13.68||-48.47%|
|E Trade Financial||$14.26||-49.96%|
|Marshall & Ilsley||$7.06||-59.28%|
|Hartford Financial Services||$23.10||-59.54%|
|American International Group||$36.13||-62.05%|
|Memc Electronic Materials||$11.04||-64.46%|
A personal note: In the summer of 2007 -- just as the subprime mortage crisis was erupting -- a colleague asked me if he should buy Lehman Bros. or Bear Stearns, which was taken over by JPMorgan Chase (JPM) in March 2008.
After an evening of research that showed me how deeply both were exposed to the mortgage market, I told him: "Neither. One or both will fail."
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[BRIEFING.COM] S&P futures vs fair value: -6.30. Nasdaq futures vs fair value: -14.80. U.S. equity futures trade hover near their pre-market lows amid cautious action overseas. The S&P 500 futures hover six points below fair value, which puts the benchmark index on track to continue its retreat after losing 0.8% yesterday.
Overnight, markets in Asia traded in mixed fashion, but sentiment worsened after the start of the European session, where all the key indices hold losses ... More
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