Market Insider: May 2008 Markets Be Forgotten

Goodbye 2008, and good riddance.

Stocks could drift higher in the final session of the year Wednesday, but volume promises to remain light. There's little expectation much will happen to take away the sting of the year's near 40 percent declines.

Wall Street
Wall Street

Weekly jobless claims, reported at 8:30 a.m., is the day's big economic news, and it is widely expected to show continued deterioration in the employment picture. Economists expect claims of 575,000.

"Tomorrow will be duller than this, except with sleet," said Art Cashin of the market (and weather) from the floor of the NYSE on Tuesday. "Bonds close early. It's hard to see final day tax selling. We're looking for remarkably light volume ... we're kind of tiptoeing into the new year." The Dow Tuesday rose 184 to 8668, a gain of 2.2 percent, while the S&P 500 rose 21 or 2.4 percent to 890.

Cashin, director of floor operations at UBS, said in a phone interview that there could be an "Obama honeymoon" early in 2009, where stocks take off on optimism about the new Administration. "I'm guessing that you need to get a little closer to inauguration to get that rally to kick in," said Cashin.

For the next couple of sessions, "I'm guessing you continue to see this low volume volatility, but not this low volume," he said. Cashin said stocks Tuesday got a push higher in part on news that General Motors saw improved sales, even before the government bailout. He said the news that GMAC was loosening lending standards as it gets government aid is also a positive.

"They've (the government) supplied money everywhere. Now they've got to get people to lend it and people to borrow it," he said.

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Tony Crescenzi, chief bond market strategist at Miller, Tabak, also pointed to the news that General Motors said its sales were improving as a positive. He said the fact that GMAC is easing up on lending requirements is what the economy needs. "One of the key stories of '08 that is likely to change in '09 is the consumer credit story. Money in '08 was cut off," said Crescenzi.

The impact of the bailout has not even been felt. " ... There's no question in my mind that the growth in credit from credit card loans and automobile loans will be improving sharply ... that's very, very important for the economy."

Meanwhile, the Fed, after the bell, provided some details on its plans to jolt the mortgage market and lower borrowing costs. The Fed revealed an aggressive goal of buying $500 billion in mortgage-backed securities by mid-2009 under the program it announced last month. Prices for mortgage backed securities rose in thin trade after the announcement.


Investors, and others, will be watching as Bernie Madoff reveals his assets to regulators. Madoff must provide a detailed list of all investments, loans, lines of credit, business interests, brokerage accounts and other holdings to the Securities and Exchange Commission by 5 p.m. Wednesday.

Questions? Comments?