Dow 13,042.74 -223.55 -1.69%
Nasdaq 2,627.94 -68.06 -2.52%
S&P 500 1,453.70 -21.07 -1.43%
This week the markets saw a major pullback to important technical levels, which had many traders and analysts concerned of being a sign of a coming recession. Signs of trouble were everywhere as the dollar sank on the speculation that
Slide of the U.S. dollar contributed to the bearish sentiment which led to declines in the major averages. Leaders to the downside were the big cap tech stocks that led the bull rally so far from the August lows. Yet it was Ciscoâ€™s earnings report that proved to be the bullet that shot the four horsemen of technology (Apple, Google, Research In Motion, and Amazon). Despite the increase in revenues, Cisco warned of future pullbacks in IT spending from some of its corporate customers in the banking and retail sectors which led to concerns about the spreading of the credit crisis to corporate
The growing mortgage problem was addressed by Federal Reserve Chairman Ben Bernanke in his speech to Congress. In his testimony, Bernanke warned that the increasing turmoil in the housing market would cause a decrease in economic growth, which will be seen in the fourth quarter. Evidence of Bernankeâ€™s prediction came when Citi-Group warned that it would book $8 to $11 billion in additional losses due to the growing sub prime worries.
Further pressure on the markets came from oil that hit a new record of $97.10 a barrel on Tuesday on geo-political concerns involving political tensions in
Historically increased volatility in the markets appears at market tops and bottoms. Since the market is only a thousand points from an all time high, the possibility of this pullback being a bottom is unlikely. This brings what could be a good time for value investors seeking to pick up some companies that may be punished by the pullback more than necessary.