The Dow dropped as much as a percent in early trading, before rebounding for a 0.38 percent loss. Over the last few weeks, we've had one trading day in which the market recedes from a subprime scare. In the previous weeks, the market has rebounded the following days. Last week, the market rebounded to post record highs. Will this week be the same? If the last half of the trading day is any indication, it could be.
One thing about trading today that made me scratch my head, is the minimal hit taken by Bear Stearns. If you'll recall yesterday, the company announced what the two troubled hedge funds were really worth: Zero, Point, Zero! Okay, actually one of the two funds is still worth nine cents on the dollar. But Bear Stearns didn't take the hit today. They lost less than half a percent. Goldman Sachs and JPMorgan, on the other hand, both lost two percent of their value; Citicorp lost one and a half percent; Merrill Lynch lost 3.25 percent.
The next two days should be telling as to what direction the market will turn. Will this be another hiccup, or the start of a correction period?
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