Friends
Quite a roller coaster ride for stocks today. After the Dow opened more than 150 points to the upside, stocks quickly plummeted more than 300 points leaving the average down more than 150 points. As the trading day came to a close, it looks more likely that there will be enough votes to get the compromise bill passed and stocks rallied back to the plus side at 2:45 our time. Over the last fifteen minutes, though, stocks got jittery again, remembering that it’s not done until it’s done. The Dow ended the day down 11 points. The S&P 500 fared a little worse than the Dow ending the day down 5 points to close the day at 1287. The S&P is holding near its 200 day moving average.
As the deal making continues on the Hill, more weak economic news continues to weigh on investors as the ISM number showed more weakness in the manufacturing sector. Once the political wrangling is behind us, we will turn our attention to Friday’s unemployment number. The difficult thing that investors have to sort through is the idea that cutting now could likely assure we enter a double dip in terms of the economy, but not cutting would have assured a downgrade in the U. S. debt rating (S&P is likely to downgrade anyway as the cuts are not seen to be enough). It is somewhat damned if you do and damned if you don’t.
We’ll be watching to see how the votes all get counted, but as the markets indicated today, there will continue to be a lot of cross currents. Investors will be negotiating the tug of war between a slowing economy and the need for austerity. In the meantime, corporate earnings continue to impress as a majority of the S&P 500 companies have beaten Wall Street estimates this quarter.
We’ll keep you updated as the week goes on. Have a nice evening everyone.
