Dow Jones Drops Below 13,000

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There seems to be a sense of gloom and doom for traders during this holiday week. The banking sector did nothing to cheer anyone up, and the news coming from home builders will most likely not be good. These feelings are having an affect on momentum.

Setting the tone was Goldman Sachs’ downgrade of large banks, and its estimate that Citigroup Inc. would have to write down $15 billion due to its exposure to risky debt over the next two quarters.

The worry on Wall Street is that the housing market is getting so weak that it will crimp consumer spending, which until now has helped keep the economy afloat. Ahead of the holiday shopping season, any signs that Americans are pulling back could prevent a December rally.

Later Monday, the NAHB releases its November housing forecast. Economists polled by Thomson/IFR expect the index to hold at 18, having dropped to that level in October after eight consecutive months of declines.

Probably just about no one is expecting good news from the home sector.

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