They're calling it "stunning" in the media. Stocks appeared to be tanking earlier in the day, but a sudden rally later in the day pushed them higher. About 300 points higher than the opening, in fact.
NEW YORK – Wall Street pulled off a stunning comeback Wednesday, surging higher in late trading and wiping out what looked to be yet another precipitous decline. The Dow Jones industrials, down more than 323 points in earlier trading, ended the day with an advance of just under 300 points, according to preliminary calculations.
While such volatility has become a hallmark of Wall Street's performance in recent months amid the ongoing housing and credit crisis, analysts saw some positive signs in the day's trading."There does come a point and time when the market itself recognizes that it got out of hand, and that is when bargain-hunters can come in," said Peter Cardillo, chief market economist at Avalon Partners.
The Fed's decision Tuesday to lower its federal funds rate by 0.75 percentage point to 3.5 percent has been met with some skepticism, but it gave intrepid investors Wednesday a reason to buy the severely dented stocks in the financial sector.
"You might say this is a belated reaction to what the Fed did this week, compounded by hopes for the Fed to do more next week," Cardillo said. Traders who bet on the Fed's target fed funds rate were pricing in on Wednesday a 100 percent chance of a 0.50 percentage-point cut by the central bank when it meets next week.
That's a bit of a surprise, I think.
I can’t believe that the reporters that write this stuff have even the slightest idea what events occurred during the day to impact the market. They interviewed an economist who is about as removed from trading markets as a plumber (no offense plumbers).
The market sell-off was picking up steam throughout the morning. There is no longer an “up-tick rule” for shorting a stock so you can just short away. Spook the cattle into a stampede and drive them of a cliff.
Hanging over our entire financial system is the prospect of trillions of dollars of bonds that may be downgraded forcing institutions to sell them. About mid-day word leaks out of a bail-out of Ambac and MBIA by banks. Shorts cover in almost panic covering. This wasn’t investors coming back, that happens gradually over time.
Look at the headline stories at either Bloomberg or ft.com to confirm this if you like.
Right you are, NortonPete. “Get me out! Get me out!” say the shorts. You see the same thing in the grain markets. Digressing, as greed and fear rule markets, one wonders why the hog and the chicken didn’t evolve as the symbols instead of the bull and the bear?
The hogs vs chickens, priceless.
I love that, too, feeblemind. Much more descriptive of reality.
A January 24th George Soros article describes the current sitiaution as part of a 60 year” “superboom” cycle. Soros believes we are now starting a “superbust”.
Interesting observation from a real player.
George Soros is a nitwit, but a rich nitwit. He extracted millions of dollars from funds for his management while the funds ultimately lost big.
My favorite Soros move:
His Quantum goes long “old technology value stocks”, short “new technology stocks” in the late ’90s as the NASDAQ is soaring, and funds abandon value stocks. Then at the peak of the NASDAQ hitting 5000, he abruptly switches his strategy, goes long NASDAQ, and sells all his value stocks taking heavy losses. The NASDAQ then crashes and his Quantum fund loses about 33% and billions of dollars.
He had a success against the British pound but lost big in a 1994 Yen bet ($600 million in one day which was a big loss in 1994).