Posted on 01/20/2010 9:42:30 AM PST by SonOfDarkSkies
U.S. stocks fell Wednesday as a reported tightening in China's monetary policy and sovereign-debt issues in Greece reminded investors of near-term concerns, killing the excitement over the Massachusetts Senate race that fueled Tuesday's rally.
...
"The market right now is coming back to reality," said John Stoltzfus, senior market strategist at Ticonderoga Securities. "To use the time-worn phrase, we really aren't out of the woods yet."
Stocks rallied Tuesday on hopes for a Republican victory in the Massachusetts Senate race. Investors grew hopeful that if Democrats lost their filibuster-proof majority in the Senate, it would result in more compromises for health-care legislation as well as other contentious topics, including financial regulation and climate-change proposals. But while Democrats were in the end defeated, the impact on stocks fizzled out Wednesday.
"While the outcome of the election undoubtedly has some long-term positive indications for policy and particular sectors, it doesn't really change the short-term primary market concerns about growth and sustainability of earnings," said Barry Knapp, managing director of equity research at Barclays Capital.
Among the health-care stocks that had climbed Tuesday, Coventry Health Care fell 2% Wednesday while Humana fell 2.3%. Merck slipped 0.8%, while Pfizer dropped 0.5%.
(Excerpt) Read more at online.wsj.com ...
Mass. elections signal major power shift and uncertainty. Markets looking for new leadership.
I wish the article had elaborated on the degree to which Greece’s financial troubles were part of this decline and why.
My guess, both actions will cause a rally in the dollar. Just a guess mind you. Once again, NO GREEN SHOOTS FOR YOU!!! Soup Czar NAZI. So we have a SOTU address coming up, the DOW is down, the CHICOMS are concerned with inflation, and bammy and his nanny nancy are planning to announce more movement on healthcare, cap’n trade, and amnesty. Should be an entertaining evening. Wow, we have become one big dysfunctional country, have we not?
Watch the dollar. This was preceded by substantial overnight strengthening. IMO, if Greece (or any of the PIGS, for that matter), are going to fall, it will first show up in a run away from the Euro, and towards the dollar.
Mass. elections signal major power shift and uncertainty. Markets looking for new leadership.
Had China not spoiled the custard, we would have had a 200+ DOW rally on the Brown news. Markets love a gridlocked Government. DOW still holds over 10,500. If this move down confirms this base I would look for a run to 11,000 in the next two weeks.
Use your favorite search engine to look up “Greece BBB bond rating” for some background.
I would not expect the health stocks to rise as a result of the election. The health insurance industry SUPPORTS Obamacare because it requires Americans to buy their product.
“the CHICOMS are concerned with inflation”
I think they are more concerned with how bubblicious their economy has become. Too many rumors that the increases in domestic consumption are actually buys by the government to keep companies alive (warehouses full of TVs for example, or massive car purchases without large increases in gas consumption). It looks awfully like one big deck of cards, fueled by unprecedented international investment, and a government more than happy to make things look a lot better than they are.
I know Greece is in deep trouble, I’m just not sure of all the ways it will affect the U.S. markets (except, as was mentioned up thread, a rush of cash out of the Euro and into the dollar).
The markets don’t need any other reason to move. Equities aren’t the dog here, they are the tail. Equities are largely disconnected from economic realities at this point.
Mostly because we’re headed down the same road under the current administration’s policies.
Are we ever!
“Mostly because we’re headed down the same road under the current administration’s policies.”
You are exactly right. Its a strategy that works well until it doesn’t. And when it doesn’t, look out. Honestly, we have painted ourselves into a corner over the last year, sacrificing Main Street in order to prop up Wall Street. And now, we are sitting on a ticking bomb (and completely exposed, waiting for international bombs to go off).
The health care plan was going to be the new gigantic "trust" fund from which the Federal government was going to suck from for many years.
Social Security is depleted. Medicare is depleted. Every current "trust" fund is empty.
The ONLY thing keeping our nation from falling into the pit of a full-blown economic depression is the massive government spending that has been occurring.
They need health care to keep this spending pattern up. It has nothing to do with the actual issue of health.
If the health care plan fails then the Federal government will have no choice but to go after the next large source of money - retirement funds.
Don’t be fooled. The fed is up to its dirty tricks again, dumping stock and driving down the market in the hope of creating the impression that the market is unhappy with the election of Scott Brown. Don’t trust the market. Obama’s fed is looking to reward and punish according to its political agenda and they are moving massive amounts of money through the market. The administration’s caprice is the only thing driving the numbers right now. Be very, very careful.
This morning the US market ran into a double whammy. The market bought the rumour of Brown’s election yesterday and so was ready to sell the fact this morning (small whammy). The China and Greece news gave us the second/third punch, and the deflationist/run to quality view is carrying the day.
It’s an unusual confluence for the dollar to be rising while bond yields are moving down and gold and other commodities take a hit. The one unifying prediction here by the market is future deflation due to weak demand. What will be interesting now is to see how long today’s thinking continues to hold sway. That will depend as always on future news.
“Don’t be fooled. The fed is up to its dirty tricks again, dumping stock and driving down the market in the hope of creating the impression that the market is unhappy with the election of Scott Brown. Don’t trust the market. Obama’s fed is looking to reward and punish according to its political agenda and they are moving massive amounts of money through the market. The administration’s caprice is the only thing driving the numbers right now. Be very, very careful.”
Except for the last sentence, the above is utter silliness.
It looks awfully like one big deck of cards, fueled by unprecedented international investment, and a government more than happy to make things look a lot better than they are.
I agree with your estimate - but China has pursued these policies for the last 20 years. Their raising rates suggests to me that they are worried about their currency, which has always been opaque like their banking practices. The “China Myth” that chinese growth would be the engine of our recovery has just officially ended. Never bought the premise. We are too big and they too little to create any meaningful growth in our market based on their overpromoted growth. That said, I don’t think this will be a real deep and lasting hit to our market. We are trading based on the failure of bammy and the success and power of private industry. Its an inverse relationship, as bammy fails, America will succeed. So what I see is a flaky overpriced Yuan in China (we both agree to this) and a flaky overpriced Euro in Europe. Methinks money will flow from both China and Europe and buy dollars, especially if international investors think bammy has been nuetered. Just my guess - and I’m sticking to it until something else major happens.
The dollar is way up, so I don’t know if this is all bad news.
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