The Markets This Week
LET'S BEGIN — WE MUST — WITH SOME GOOD NEWS: An asteroid big enough to level 800 square miles of land whizzed by but missed our little planet last week, and we're still alive.
Here on Earth, however, the destruction wrought by relentless selling in the stock market is becoming painful to behold: The stock market has lost $2.6 trillion in less than 10 weeks. Spring training has barely begun and the Standard & Poor's 500 is already down 24% this year, compared with the 38% loss for all of last year. The Russell 3000 has lost more than $1.7 trillion since Feb. 13, more than twice the $789 billion economic stimulus Congress approved that day.
Selling got so severe at one point that President Obama was moved to flag the market's cheap "profit and earnings ratios," and how "buying stocks is a potentially good deal" for long-term investors.
Stocks fell 12 of the past 15 sessions. It might have been 13 if stocks hadn't mustered a sharp swerve higher late Friday afternoon, after the government reported 651,000 workers laid off in February. Total job cuts this recession reached 4.4 million as the unemployment rate climbed to 8.1%, worsening worries about rising loan defaults and more bank losses.
Such sharp selling, however, increases the odds of at least a temporary bounce in the oversold market, even if a lasting rally and economic rejuvenation remain elusive. Bear-market bounces are transient but are nothing to scoff at. The last one, from Nov. 20 to Jan. 6, produced a 24% gain. So even as stocks finished Friday near their lowest level since 1996, traders dutifully covered their short positions (source: Barrons Online).
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