Washington Officials Look Into Last Week's Sudden Stock Plunge
The stock market had one of its best rallies in the past couple years on Monday. The really help ease concerns about last week's bizarre blip. Investors hope the 1,000 point freefall never happens again. Washington officials are looking into the matter . The AP says Washington officials will be meeting this week with executives from the New York Stock Exchange and NASDAQ. The exact cause of the sudden downturn is still unknown.
There is concern going forward but the third quarter was very bullish for stocks. The Dow, S&P 500 and Nasdaq each gained over 15% in the third quarter alone. Reuters says the Dow's performance was the best for a quarter since Q4 of 1998.
For the third quarter, the Dow rose 15 percent, the S&P 500 gained 15 percent and the Nasdaq climbed 15.7 percent. The Dow's performance marked its biggest quarterly gain since the fourth quarter of 1998.
Time will tell if the gains hold. Over the next two quarters people will expect to see stronger signs of a recover. Without them stocks could retreat.
The stock market turned a solid performance after months of news lows and uncertainy. It wasn't double digit growth but the main indexes Dow, Nasdaq and S&P each climbed greater than 7% during July.
Dow +8.4%
Nasdaq +7.8%
S&P 500 +7.4%
The Wall Street Journalreports that July, 2009 was the best monthly performance for the Dow since October, 2002. Overall the Dow is still over 35% below its peak but at least investors have some renewed confidence seeing the Dow back above 9,000. For the rally to continue we are going to need some good earnings reports and a lack of scary economic figures that cause stocks to trend southward again.
Stocks have rebounded lately. The Dow is back above 700 and the S&P is closer to 800 than 700. It was just two weeks ago when analysts were discussing the possibility of the market heading below 6,000. A Wall Street Journalarticle discussed the possibility of the Dow sinking below 5,000 or the S&P going below 500 with several analysts saying it was possible.
While Silvant sees the S&P staying in a range of 650 to 750, a decline to 500 is "definitely possible," Mr. Guinther says.
A level of 500 on the S&P is "possible, but I wouldn't put it in the realm of probable," says Thomas Lee, chief U.S. equity strategist at J.P. Morgan. Mr. Lee on March 2 removed a tentative "buy" recommendation he had placed on the S&P in February.
For Mr. Lee, the S&P at 500 "would imply that we are now in a period similar to April 1932 -- the final stages of a bear market."
Between April 8, 1932, and July 8, 1932, stocks fell 34% -- a little more than what it would take to get the S&P to 500.
A level of 500 would take declines for the S&P to 68% since its October 2007 high, compared with the peak-to-trough depression-era slump of almost 90%.
It's certainly possible the stock market could see lows again. We haven't really had any sectors reporting positive growth that would kick the market out of its bearish cycle.
The Dow and S&P 500 have falled to levels not seen since the 1990s. It's the Dow's lowest close since May 1997. Both the Dow and S&P 500 lost over 3% as they plunged to new lows. The Nasdaq lost nearly 4% on the day. Concern about the strength of the economy continues to drive stocks downward. Here's a look at the numbers for today.
Investors had been expected a grim jobs report but news that the economy had lost another 500,000+ jobs and that unemployment had climbed to 7.2% was too much for the market. The Dow fell 143.28 points and the Nasdaq fell 45.42 points. President-elect Barack Obama has been out trying to interest Congress in his plan to save the economy.
Little Rally on Final Day of Trading Does Little to Modify 2008's Huge Losses
Markets closed up for the final trading session of the year. The Dow climbed 108 points and the Nasdaq rose 26 points. The positive end to the year did little to change the overall pattern of 2008 which was the worst year for the Dow since 1931.
Washington Mutual (WM) has apparently put itself up for sale. An MSNBC article discusses the fear that is gripping the marketplace as investors worry another shoe could drop.
"People are scared to death," said Bill Stone, chief investment strategist for PNC Wealth Management. "Who would have imagined that AIG would have gotten into this position?"
He said the fear gripping the markets reflects investors' concerns that AIG wasn't able to find a lifeline in the private sector and that Wall Street is now fretting about what other institutions could falter. Over the past year, companies including Lehman and AIG have sought to reassure investors that they weren't in trouble, and now the market isn't sure who can and can't be trusted.
"No one's going to be believing anybody now because AIG said they were OK along with everybody else," Stone said.
The two independent Wall Street investment banks left standing - Goldman Sachs Group Inc. and Morgan Stanley - remain under scrutiny, as does Washington Mutual Inc., the country's largest thrift bank. Morgan Stanley revealed its quarterly earnings early late Tuesday, posting a better-than-expected 7 percent slide in fiscal third-quarter profit. It insisted that it is surviving the credit crisis that has ravaged many of its peers.
A Bloomberg story says some of the problems today have to do with bank lending seizing up.
"It's ugly," said Michael Mullaney, a Boston-based money manager for Fiduciary Trust Co., which oversees $10 billion in stocks and bonds. "It's about the worst I've seen it in 25 years. You have to have free-flowing credit to lubricate the system. That's not happening right now."
Marketwatch is reporting that the Wall Street Journal says Citigroup and Wells Fargo may be interested in buying WaMu.
One bright spot on the day was gold which scored its biggest 1-day increase ever. Gold prices climbed $70 to settle at $850.50 in the regular session. Gold prices also climbed another $20 in after-hours trading.
Hopes that the economy was going to rebound from its long slump and from the credit crisis were shattered Thursday by negative retailer reports and concerns about Friday's jobs report. The Dow fell over 340 pounds as investors sold on the negative news. It looks like the bears have returned until we can get some good news again.
The market was already nervous as it waited for the government to release its August employment report on Friday. So news from the nation's major retailers that shoppers curtailed their spending last month due to higher gas and food prices came as a heavy blow.
Wal-Mart Stores Inc., the world's largest retailer, beat expectations because of its big discounts, but many teen retailers and luxury chains did poorly, a sign that consumers are spending mostly on essentials and putting discretionary buying on hold.
Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 last week from the previous week. That broadly missed expectations for a fourth-straight week of declines, heightening worries that the average American -- already feeling the effects of the weak housing market -- will have even less means to spend.
Vanguard Group Founder Jack Bogle Tells Investors to Stay the Course
The Dow dropped more than 230 points today as concern over financials continued. The Vanguard Group Founder Jack Bogle told investors to change nothing in the video from Fox Business below. He dismissed the idea of "doubling down" and said investors should focus on staying the course. Bogle also said the market today is being driven by speculation.
Bank for International Settlements Foresees Deeper Downturn
The Bank for International Settlements says that we could be in for a deeper downturn than most people are expecting. They point to the credit crisis and rising inflation as the reason for their gloomy view.
"In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation," the BIS said in its annual report.
"While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect."
The Basel-based bank added that the current "consensus view is still that the global economy will slow only modestly further in 2008" and that growth continued to be strong in the euro zone, Japan, and major emerging market economies.
Often called the central bank of central banks, the BIS said during its last fiscal year central banks worldwide reacted to the financial and monetary policy situation differently, and that given their countries' different economic situations, a "one size fits all" monetary policy can't necessarily be predicted or suggested.
The bank said that with inflation rising, a global bias toward higher interest rates was probably appropriate. Higher interest rates can cool inflation, but run the risk of lower growth.
An article in Bloomberg suggests that today's stock market situation is more like 1974 than it is like 1994. Everything seems to point toward a significant downturn.
"Between inflation and the liquidity crisis, this is one of the toughest markets I've seen," said Dreman, who oversees about $15 billion in Jersey City, New Jersey. "But it's not a market you sell into. Any losses you take by being too early will be more than offset by buying cheaply."
Asian stocks were down again recently. Oil prices opened higher again today setting another new record.
Stocks tumbled again during the final day of the week. The Dow lost 1.2% on the week while the Nasdaq eeked out a slight gain. It was a consumer sentiment drop that hurt stocks today as well as a profit warning from JC Penny.
The Dow fell 86 points to 12,216. The S&P 500 lost 10 points to 1,315. The Nasdaq gave up 19 points to 2,261. Crude oil prices dropped nearly $2 to settle at $105.62 a barrel.
Next week there will be a crucial jobs report that could send stocks falling if it is weak.
News that the Fed is going to provide additional liquidity for the credit markets help boost stocks to huge gains today The Dow scored its best one day percentage increase in 5 years according to Reuters. The Dow climbed 416 on the day and the Nasdaq was up 86 points.
At the same time cities are starting to feel the impact of the tough housing markets. There are more homeless people. There is more crime. There are less revenues for U.S. cites.
The mortgage foreclosure crisis has caused a drop in cities' revenues, a spike in crime, more homelessness and an increase in vacant properties, a survey of elected local officials out today shows.
About two-thirds of 211 officials surveyed by the National League of Cities reported an increase in foreclosures in their cities in the past year, according to the online and e-mail questionnaire. A third of them reported a drop in revenues and an increase in abandoned and vacant properties and urban blight.
"There's a reduction in revenues at the same time that more services are needed," says Cynthia McCollum, president of the National League of Cities and councilwoman in Madison, Ala., a suburb of Huntsville. "Because of foreclosures, people are stealing, crime is on the rise and we don't have more money for cops on the street."
The market had a boost today but the foreclosure crisis is worsening.
The New York Timesreports that the stock market plunge in Asia and Europe continued into Tuesday. Stocks are falling due to concerns that the U.S. economy is headed for a recession. MarketWatch has a roundup of the two day losses.
Amid fears that the United States may be in a recession, the decline in stock markets accelerated this morning as exchanges opened across Asia.
Markets in Tokyo, Hong Kong, Sydney all fell farther in the opening hours of trading today than they had all day Monday. Until now, overseas markets had largely avoided the sell-off that has caused steep declines recently in the United States, whose markets were closed Monday in observance of Martin Luther King's Birthday. But investors reacted with what many analysts described as panic to the multiplying signs of weakness in the U.S. economy.
And in a sign that the United States could join the sell-off today, trading in U.S. stock futures Monday suggested that the Dow Jones industrial average would fall more than 500 points at the opening bell.
Marketwatch also says that the DJIA futures are currently down 650 points which could result in a miserable and nervous day of stock trading today.
There is concern going forward but the third quarter was very bullish for stocks. The Dow, S&P 500 and Nasdaq each gained over 15% in the third quarter alone. Reuters 
Stocks tumbled again today despite the 