Today, the Dow Jones Industrial Average was down nearly 163 points and the NASDAQ and S & P 500 were off also. It was a broad-based down day for equities. It’s all about uncertainty and that uncertainty is impacting the psychology of the market, intimidating buyers with little clear direction.
A shadow has been cast over the U.S. markets by a tumultuous Europe, neck deep in an economic tsunami and climbing out on an oil-soaked slope. The Euro is in jeopardy and the solidarity of the 17-nation pact sits in a stew made by some members, but cooking others. The unmanageable economies of some impacting the more conscientious approach of others.
Europe’s Slow Pace
It simply took too long to get serious about the problems in Europe and many of the discussions fell short in their remedies. A recession looms over Europe and the U.S. market knows what’s ahead. The recent floods in Bangkok hurt the stocks of many technology companies and more evidence of that was present in today’s market as Intel shares fell 4% on revised revenue estimates.
Moody’s and Fitch made it clear today that rating downgrades are likely on the horizon for Euro member countries. That outlook deflated the recent optimism that came out of a Euro-region economic accord. The agreement that came out of that accord is seen as falling short of the massive change that is needed. As of this writing, the Asian markets are reacting to Europe’s instability with markets dropping.
The irony of all this is that a majority of large companies in the U.S. have beat analyst’s earnings expectations. They also sit on more money with an uncertain regulatory environment stifling hiring. The pain in Europe is causing stocks to require hospitalization here as investors are reminded of the global nature of modern markets.
© 2011 K Richard Douglas
