The major indices Tuesday regained more than half of yesterday's losses on 1) hopes that a bailout bill will be passed in Congress this week, 2) lack of concerted selling, as volume was lighter than normal due to the Jewish holidays, and 3) hopes that regulators might help out.
- Poll: Should The Fed Cut Rates?
- Pickens: Oil's Gonna Hit $150. Here's When.
This is a dangerous game, because it means that the market is hostage to the “TARP trade,” and has become detached from any fundamental consideration.
And with good reason: without knowing borrowing costs for corporations, it's impossible to figure out where stocks should be trading. That’s what the TARP is supposed to do: put some kind of floor on the credit market.
But this too will pass; by next week, we should get back to real issues like earnings and the global economy.
For the third quarter:
Dow Industrials down 4.4% (down 4 quarters in a row, hasn't done that since 1977-78)
S&P 500 down 9.0%
NASDAQ down 9.2%
Amex Oil Index down 25%
Semiconductors down 17%
Cyclical Index down 10%
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