Don't look now: Here comes the recession

Even with a boost from holiday spending, the U.S. economy looks shaky, thanks to slumping housing prices, Wall Street woes and debt-laden consumers. How bad could it get?

Dow is -50 pts...

Even if the Dow closes up 200pts tonight, it makes no difference... the downtrend is already established and underway... 

Coming!!!

Stocks creep higher

Wall Street starts the post-Thanksgiving session in positive territory, thanks to early retail sales reports.

Stocks crept higher Monday morning, as investors welcomed an upbeat start to the holiday retail sales season, but gains were limited by ongoing worries about the health of the financial and housing markets.

The Dow Jones industrial average (Charts) added 0.3 percent in the early going. The S&P 500 (Charts) index was barely changed and the Nasdaq composite (Charts) gained 0.4 percent.

All financial markets were closed Thursday for Thanksgiving, and closed early on Friday, with many Wall Streeters making a four-day weekend of it. Monday morning was slow to start as participants continued to drift back after the holiday.

The early reports from the nation's retailers were positive, with reports from Black Friday and the weekend showing a strong turnout, although no big splurgers. (Full story)

But news reports that Citigroup (Charts, Fortune 500) could announce massive layoffs amid the credit market crisis weighed on that stock.

In addition, Citigroup lowered its near-term outlook on the homebuilders, saying it is hard to see when the bottom will be made for the hard-hit industry. Centex (Charts, Fortune 500), Lennar (Charts, Fortune 500) and KB Home (Charts, Fortune 500) were among the names cited in the report and all fell in early trading.

Treasury prices were little changed with the yield on the benchmark 10-year note at 4 percent. Treasury prices and yields move in opposite directions.

U.S. light crude oil for January delivery fell 33 cents to $97.85 a barrel on the New York Mercantile Exchange.

Markets open flat

Consumers came through at the start of the holiday shopping season. But can the markets withstand more subprime hits?

U.S. stocks opened flat Monday on reports of a good start to the holiday shopping season, but continued worries about the mortgage market could temper any gains.

All three major indexes were closed to break-even at the start of trading.

The holiday shopping season kicked off with a bang in the United States on the day after Thanksgiving, known as Black Friday.

ShopperTrak RCT Corp., which tracks sales at more than 50,000 U.S. retail outlets, said that total Black Friday sales rose 8.3 percent. But the National Retail Foundation's survey said shopper traffic was up only 4.8 percent over the weekend, and that the average amount spent per consumer was down 3.5 percent.

Still, hopes for a strong holiday shopping season appeared to be giving stocks a boost in the early going. Stocks in Asia finished the session sharply higher, with indexes in Hong Kong and Seoul both up more than 4 percent. European markets were posting more modest advances in midday trade.

"Even if some of the numbers show each shopper spending a bit less, I think when it's all said and done, the consumer will probably prove out to be pretty good, and the market is reflecting on that," said Peter Cardillo, chief market economist at Avalon Partners. "

But oil prices still near $100 a barrel and the expectation of more bad news at mortgage financing firm Freddie Mac could easily upset U.S. markets. Oil prices gained 30 cents to $98.48 in early trading, although that was off of earlier highs.

Freddie Mac, which last week shook capital markets as it reported a $2 billion loss that left it near the minimum capital requirements required by its regulators, is expected to announce a share offering of as much as $5 billion early this week. The offering could further depress its own stock and raise new concerns about fallout from the credit market problems.

The Wall Street Journal reported Monday that Countrywide Financial (Charts, Fortune 500), the nation's largest mortgage lender, has turned to the Federal Home Loan Bank in Atlanta as its major source of funding since mid-August. The paper reports that Countrywide's borrowings at the quasi-governmental entity stood at $51.1 billion as of Sept. 30, up 77 percent from three months earlier.

E-Trade Financial (Charts), the online broker that saw its shares spike 25 percent in Friday trading on takeover speculation, could see negotiations on a possible purchase hung up on concerns by potential buyers about the value of its portfolio of mortgage securities, according to a report in the Journal.

"The credit woes are going to be around for a long time," Cardillo said. "But I think when it is all said and done, investors are going to focus on the economic numbers and the fact that the economy is not slipping into a full-blown recession."