Wall Street stocks smash records to score new highs - 13-Jul-07 - Generational Dynamics

Generational Dynamics Web Log for 13-Jul-07

Wall Street stocks smash records to score new highs

All it took was some news that "wasn't bad," according to Kai Ryssdal on PBS's Marketplace. His guest added that "expectations were that we would get some really bad news today, but instead, we got some OK news."

The AP described it as follows:

"Wall Street soared Thursday, propelling the Standard & Poor's 500 index and Dow Jones industrials to record highs as bright spots among generally sluggish retail sales allowed investors to toss aside concerns about the health of the economy.

The rally, which gave the Dow its biggest one-day percentage gain in nearly four years, was perhaps surprising given that there was no extraordinary announcement or other catalyst often seen with such a huge gain, and that it came before most companies have announced their second-quarter earnings. The rise also marked a sharp contrast to the start of the week, when stocks fell sharply amid concerns that some hedge funds could succumb to ill-placed bets on the housing sector.

But investors, heartened by signs of a happy and spending consumer, clearly decided to put some money on the table. Though retail sales generally appeared to be crimped last month by higher gasoline prices and a tepid housing market, and the outlook for the coming months was difficult to ascertain, the overall reading wasn't as dour as some investors expected. ...

"It's relief that things weren't as bad as people expected," said Bill Schultz, chief investment officer at McQueen, Ball & Associates, referring to the retailers' reports and the economy at large. "We're maybe getting slower growth but not the fall-of-the-cliff economic scenarios," he said of investors' reading of the economy. ...

The Dow shot up 283.86, or 2.09 percent, to 13,861.73; its previous record close, which also came June 4, was 13,676.32. Thursday's jump was the biggest one-day percentage gain for the blue chip index since October 2003 and the biggest one-day point gain since October 2002. The Dow also reached a new trading high of 13,869.94 and had its 50th record close since October.

The Nasdaq composite index rose 49.94, or 1.88 percent, to 2,701.73; the rise Thursday marked the biggest one-day percentage increase since March. The last time the Nasdaq closed at such levels was in February 2001. Still, the index, bloated by the late 1990s tech boom, is nowhere near its closing record of 5,048.62, set in March 2000."

Can you find any reason in the above to justify these records? Neither can I.

Investors are working on pure emotion. It's as if they're scared to death of what's coming soon, and they want to get on the last train out of the station before the earthquake hits.

A web site reader wrote the following to me on Thursday evening:

"Hang in there, John. That tire is just about to explode. I don't care if there was a gain of 283 today. Let's watch. I've told all the people I know to pull their money out, and they treat me like a nut job. Oh well, I can give high interest Mafia loans when the market crashes."

And so, dear reader, and I can only endorse the reader's suggestion. If you're still in the market, you made a big killing today. Don't be greedy, or you'll be sorry. (13-Jul-07) Permanent Link
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Generational Dynamics Web Log for 13-Jul-07 Wall Street stocks smash records to score new highs

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Generational Dynamics Web Log for 13-Jul-07
Wall Street stocks smash records to score new highs