10.03.08
Home Market Timing Weekly Updates Weekly Update Archives|
10.03.08 In what turned out to be the worst week for stocks in seven years, the S&P 500, Russell 2000 and Nasdaq 100 respectively lost 8.70%, 11.23% and 11.93%. Stocks posted huge losses this week, with most of the damage occurring Monday following the stunning rejection of the financial bailout plan by the House of Representatives. The street had expected the bill to pass, so disappointed investors sold heavily on the news, causing the stock market to suffer one of its worst days ever: The S&P 500 shed 8.8%, its second-biggest price drop in history. With lawmakers feverishly working on a new version of the rescue plan, expectations that the bill would eventually be approved later in the week helped the major averages rebound strongly Tuesday, with the S&P 500 regaining 5.3% on the day. News that Warren Buffett is investing $3 billion in General Electric helped the market recover from early losses Wednesday to finish almost flat. As expected, the financial rescue plan was approved by the Senate after the close, but the release of several weak economic reports Thursday morning caused sellers to return in force: the jobless claims report jumped to 497,000, more than expected, and factory orders for August dropped 4%, the worst reading in two years. As the data clearly pointed to a decelerating economy, renewed selling sent the Nasdaq Composite 4.8% lower. Even though the Labor Department announced Friday morning that more jobs were lost in September than expected, investors decided to ignore the news and focus instead on the anticipated approval of the $700 billion financial bailout plan by the House of Representatives, sending the main indexes 3% higher or more ahead of the decision. However, after the bill was indeed approved, the gains quickly evaporated to turn into losses as concerns over the weakening economy immediately resurfaced. It is apparent that the Economy is now at the forefront of the “worry warts” thoughts and actions. The “give back” at the end of the day on Friday speaks volumes about what to expect next week. As we have been saying for some weeks now, the best place to be in this type of market in on the sidelines. That’s where we have been and that is where we are going to stay for the start of next weeks trading. Till next time
|
