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Wall Street's wild ride promises to continue as Congress wrangles over details of a financial markets bailout, and investors assess the government-brokered deal for Washington Mutual.
Cash is king is no longer just a cliché, it has become a mantra for markets in times of high uncertainty.
It's never pretty on Wall Street when the action in Washington rules the markets. That's certainly been the case this week, while Congress wrestles with the merit and shape of the $700 billion financial markets rescue package, proposed by Treasury Secretary Hank Paulson
There may still be value in the markets if investors choose carefully from the stocks carnage debris.
Warren Buffett is driving the latest ambulance to show up on Wall Street, and his first aid may in fact give a boost of confidence to the market and Washington's rescue process.
The euphoria is gone, and global markets have fallen in response to Washington’s $700 billion financial sector bailout. Most of the experts are not convinced it would work, although they admit there is a silver lining.
The scorching volatility ripping through financial markets is not likely to let up while details of the government's rescue plan are being worked out.
As I watched Yankee legends and their families take the field last night before the final game at the 85 year old House that Ruth Built, I was amazed again by how many winning years they have had. 26 World Series Championships in 85 years - the most wins of any professional sports franchise in history. Did the positive energy from the wins flow down the East River to Wall St. and lift the markets those years?
For the historic week ending Friday, September 19, 2008, the major U.S. Indices managed to close mixed and almost flat after one of the most volatile trading weeks ever, driven by the collapse of investment bank, Lehman Brothers, enormous government actions around the globe, and billion dollar deal making. In one week, the government bailed out AIG, pumped funds into money markets, and banned short selling of financials - all while keeping the Fed Funds target unchanged and taking unprecedented actions to halt the liquidity crisis. The CBOE Volatility Index (VIX) surpassed the benchmark level of 30, hitting an intraday high of 42.16 on Thursday, its highest level since 10/2002. The major indices were all up and down +/- 3% for 4 of the past 5 days. The Dow posted a 2 day point move of more than 778 points as of Friday’s close, after plummeting 811 between Monday and Wednesday and hitting 10,609.66, its lowest level since 11/9/2005. On Friday, The Nasdaq Composite recorded a 2-day point move of greater than 175 points after it closed down 109.05 points on Wednesday, its first triple digit decline for one day since it began trading after the 9/11 attacks. The S&P 500 flirted with record territory closing up 98.7 over the last two days, marking its biggest 2-day point move since 3/16/2000, the largest 2-day point move ever.
On a week where Financials once again dominated the market with unprecedented moves by the U.S. government, the Dow trades in an over 1000 point range for its biggest 2-day gain since March, 16, 2000.
With the new ban on short selling, the financials are surging, up 11%. This is not the case for all those short and ultrashort ETFs.
Attorney General of New York State, Andrew Cuomo talks about short selling while an analyst believes that the Dow will fall to 8000 in a months time. Following are today's top videos:
While the debate is on whether stocks are at a bottom, there might be a silver lining to the current financial crisis. Wednesday marked the 12th time the Dow & S&P have both been down by more than 7% over the same 3-day period. Whenever that's happened in the past, it's usually been followed by major increases--even a month later.
While Kraft Foods will be joining the Dow Industrials on Monday, in a way, it's not the first time it has been a part of the Dow.
Kraft Foods is going into the Dow Jones Industrial Average this coming Monday to replace AIG, the insurer that's been taken over by the federal government. Warren Buffett's Berkshire Hathaway is Kraft's biggest stakeholder with about 138 million shares, worth over $4 billion. That's a stake of over 9 percent.
The storm hitting Wall Street ramped up to category 5, and it's not over. Wednesday's markets illustrated in every way the fears investors have been living with since the credit crises began a year ago.
Despite all of the developments this week, with a current market cap of $5.5 billion, AIG remains bigger than just over a quarter of its fellow S&P 500 components.
The unprecedented government rescue of insurance giant AIG calms the market's angst, but the question is whether credit markets will cooperate with the Fed and what other shoes are there left to drop.
With the markets starting down again today before rebounding, here are the top ten 2-day percent and point moves for the major indices. If the Dow closes down more than 23 points today, it would reach a top 10 point move. The S&P would need to close down less than 1 point to reach a top ten status. The Nasdaq is far from a top ten 2-day point or % move.
The already roiled markets have a new fear: the survival of AIG.