Cisco reported decent numbers but had some concerning words about the economic environment and its effects on business in the foreseeable future. With that back drop, the markets braced for a weak day. As the morning progressed stocks dropped over 1% until rumors about the upcoming government plan started to spread. The hearsay that began to lift the markets was that the mark-to-market accounting rules would be revised to give some relief to distressed assets on bank balance sheets. This may be a short-term band-aid but more aggressive medicine is needed to clear away the toxic assets.
Stocks ended the day up well above 1% as hope that fresh government initiatives would bring stability to the markets while fostering growth in the economy. Tomorrow morning we will find out how many jobs were lost in January and unless it is a really ugly number, the markets could ride into the weekend with expectations of some good news next week. This short-term trade could develop legs but in the end, it is still "all about the economy" and earnings announcements continue to be sour and business is retrenching. Expect the stock market to ultimately test new lows and likely break them in the next couple of months. Until then, perhaps we will see a rally.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment