Bizarre Action In Countrywide Causes Market Selloff
We’re pretty much just treading water here, consolidating the big down moves for last week and waiting for earnings.
Stocks were up a bit this morning until Countrywide Financial (CFC) started selling off around 11am EST. The shares lost about 20% of their value within 15 minutes (CFC Intraday Chart) and nobody is really sure why.
There was a New York Times story this morning about how Countrywide apparently fabricated some letters that were not actually sent in a court case. But that news was out before the open and doesn’t explain the precipitous falloff around 11am.
The whole market sold off in tandem with Countrwide, giving up about 1% and moving from solidy positive to solidly negative in the 45 minutes after 11am EST (S&P Intraday Chart).
UPDATE (Tue 1/8, 11:00am PST):
Countrywide Denies Bankruptcy Rumors
Apparently, the reason for the big selloff in Countrywide this morning, which infected the entire market, was rumors that it would file for bankruptcy. After denying those rumors, Countrywide shares have recovered somewhat and the rest of the market most of its prior losses.