The Stock Market Roller Coaster

Two years ago yesterday, the Dow Jones Industrial Average achieved its all–time record high of 14,198.10 points. It had been less than 10 years since the stock market cracked the previously unthinkable 10,000–point barrier on March 29, 1999.

At that point, only the sky seemed to be the limit, but we all learned there was a plexiglas ceiling that stood in its way.

Less than 18 months later, the stock market dropped to a decade–low level of 6,469 points.

Talk about a free fall.

It took more than 75 years, from the day in 1896 when the DJIA opened, for the stock market to crack 1,000 points. It took almost one–third as long for the stock market volume to reach 10,000. Less than 10 years after that, it reached its all–time high.

Perhaps it was inevitable that it would collapse under all that weight.

Today, stocks climbed to their highest point in nearly a year. They've been flirting with the 10,000 mark on this Columbus Day 2009, but, with about an hour left in today's session, the volume has dropped back to about where it was when the day began.

Even so, with the way things have been going lately, it seems likely that it will crack the 10,000 barrier again, which may or may not be good news.

"The Dow is moving closer to 10,000, a key psychological level that could trigger a more aggressive wave of buying — or a big selloff," writes Alexandra Twin for CNN.com. "The Dow last crossed 10,000 on Oct. 7, 2008, when it briefly touched 10,124.03. The Dow last closed above 10,000 on Oct. 3, 2008, when it ended at 10,325.38."

Let's hope that this time, when it crosses the 10,000–point level, it stays there longer than it did in 2008.

Definitely Not a Slow News Day

Today has been the kind of day that makes me wish I was back on a newspaper copy desk.

Several interesting things have been happening today. I spent many of my copy desk years in sports, so Friday nights always tended to be busy for us, whatever the season. By comparison, most of the time, Friday nights seemed to be rather tame on the news side.

I found out that wasn't always true when I was transferred to the news side.

It is a fact that there are "slow news days." But today wasn't one of them.

• I guess the most important news of the day was something that news editors already knew was coming — the monthly jobs report. Unemployment continued to make its way to double digits, going up to 9.8%. For those who thought the recession was over, as Paul Krugman writes in the New York Times, "mission not accomplished."
  
  Michael McKee and Alex Tanzi report in Bloomberg.com that "[f]or the first time, the average amount of time it takes fired employees to find a new job exceeds the length of their standard unemployment benefits."
  
  And the loss of more than 250,000 jobs in September apparently contributed to another week of losses on Wall Street.


• The jobs report comes out on the first Friday of each month so editors have a lot of time to prepare for it, just not a lot of time to digest the numbers.
  
  We don't know all of the revenue Chicago lost when it was rejected by the International Olympic Committee. But one of those who lobbied for the city in Copenhagen said it lost $70 million in fundraising for expenses.
  
  How much was lost from the additional tourism that would have been generated? I suppose that is anyone's guess.
  
  Losing isn't just measured in dollars. Given the fact that Barack Obama flew to Copenhagen to boost Chicago, Republicans on Capitol Hill already were speculating that "the White House staff, the senior staff needs to get together somewhere and figure out how they are going to fix this, because they are in a deep slump."
  
  Back in Chicago, Rick Pearson, Katherine Skiba and Kathy Bergen of the conservative Chicago Tribune said it was a "a political blow for President Barack Obama and Mayor Richard Daley."


• Obama certainly didn't need any more bad news, but the director of the White House Office of Energy and Climate Change Policy said it wasn't likely that a climate and energy bill will be ready for his signature before he goes to Copenhagen to negotiate a global climate treaty in December.


• In what could be called, I suppose, he said–he said, David Letterman revealed last night that he had been the target of an extortion attempt. Letterman said someone told him to pay $2 million or information about his sexual relationships with women who worked on his show would be made public.
  
  Letterman said he had contacted the D.A., and a CBS employee was arrested Thursday. Today, Letterman was commended by critics for the way he handled things, and the employee entered a plea of not guilty to the charge of attempted grand larceny.
  
  I guess this story will have legs.

And so it goes.

Bernanke's Optimistic Appraisal

Federal Reserve Chairman Ben Bernanke said today that the world economy is starting to emerge from the recession.

I'll take his word for it. I studied economics in college — Arts and Sciences required students to pass two semesters of principles of economics, which I did. But that was not my major.

I suppose that, if I had the answers that would speed things up and get an economic recovery started, I'd occupy a seat on the Fed with Bernanke. But I don't. I guess I'm like most Americans. I just hope that they make the right decisions to keep this country moving in the right direction.

I guess that assumes that we are moving in the right direction. I suppose that is the kind of thing one has to take on faith.

Well, Bernanke sounded hopeful today. "[T]he prospects for a return to growth in the near term appear good," he said.

Much of what he said was kind of obvious.

"One very clear lesson of the past year — no surprise, of course, to any student of economic history, but worth noting nonetheless — is that a full–blown financial crisis can exact an enormous toll in both human and economic terms."

Obvious. Hundreds of thousands of Americans are bracing themselves for the loss of their unemployment benefits in the near future. How are those people going to survive? How will they pay for food, clothing and shelter?

"A second lesson — once again, familiar to economic historians — is that financial disruptions do not respect borders. The crisis has been global, with no major country having been immune."

Again, nothing new there.

Well, if you want to read his remarks in full, you can do that here.

On Wall Street, they probably didn't take the time to read everything that Bernanke said. They got that he was sounding a hopeful note, and stocks closed at new highs for 2009.

And home sales set a new record.

All that is good news for the Obama administration, I guess.

But, for millions of Americans, things aren't going to get better until they have a job and a paycheck.

Until then, health care reform really doesn't matter much, does it?

I Could While Away the Hours ...

"... conferrin' with the flowers, consultin' with the rain ..."

Well, that makes about as much sense to me as some of the things I'm witnessing.

Here's a good example. Today, Fed chief Ben Bernanke told Congress that the pace of the economic decline appears to have slowed, but unemployment is likely to stay high for another two years.

So what happened on Wall Street? The Dow Jones industrial average closed at its highest level since two weeks before Barack Obama took the oath of office.

Ever get the feeling that the Scarecrow from the "Wizard of Oz" is running things on Capitol Hill? Or Wall Street?

Maybe he's running the Cambridge, Mass., police department, which arrested Harvard University professor Henry Louis Gates Jr. at his home last week. Charges against Gates, who is black and is also a law professor who spent a couple of years working on a documentary on Abraham Lincoln that was shown on PBS earlier this year to mark the occasion of Lincoln's 200th birthday, have been dropped, but they never should have been filed in the first place.

Apparently, Gates returned from a trip to China to discover that his front door was jammed. He managed to open the back door of his home with a key, but he was unsuccessful in his attempt to open the front door from the inside. Gates, the director of Harvard's W. E. B. Du Bois Institute for African and African American Research, had been in his residence for a few minutes when a police officer arrived and asked him to step outside. He said he had received a report of a possible break–in.

Gates produced his driver's license and his Harvard ID, but that apparently wasn't sufficient for the police officer. Gates was arrested on charges of disorderly conduct and taken to jail, where he spent the next four hours.

Seems to me the driver's license and the Harvard ID should have been enough to make the police officer aware of the identity of the man he was speaking to.

Maybe Gates could have handled things better, but my guess is he was tired after returning from a trip to a country halfway around the world. Presumably, his luggage was nearby and he must have had his passport and airline ticket stub handy.

Surely, that would have been enough to convince the police officer — unless his head was harder than the Tin Man's.

The Jobs Market

Today's jobs report was a mixed bag.

On the one hand, nearly 350,000 jobs were lost in May. But, on the other hand, economists had predicted that 520,000 jobs would be lost. So the pace of job losses is slowing.

And the unemployment rate rose from 8.9% to 9.4%. Economists had predicted that the unemployment rate would be 9.2%.

CNN quoted Kurt Karl, chief economist at Swiss Re, as saying, "That 345,000, while an improvement, is still a lot of jobs. We're not out of the woods yet."

Indeed, the trees are still burning down. But they aren't burning as fast. Some water has been sprayed on them and that's slowing down the fire, but it isn't stopping it yet. We have to keep spraying.

Still, job losses were lighter than they have been since last September, which prompted a mixed reaction on Wall Street. Dow Jones and S&P; 500 were up slightly; NASDAQ was virtually unchanged.

Paul La Monica cautions, at CNNMoney.com, that it is wise to look upon this news with a wary eye.

Certainly, there is a lot to be said for taking the "glass is half–full" approach instead of seeing the glass as being "half–empty."

My brother is a "half–full" type, and I listen to him (probably more than he realizes!) when he speaks of the value of positive thinking.

But I have heard a lot of people saying a lot of things since the economic meltdown last fall, and it all seems to bring me back to a line I heard James Whitmore utter once in a movie.

In the movie, Whitmore played Harry Truman in a filmed version of Whitmore's one–man play, "Give 'Em Hell, Harry!"

And the line's one of those things that makes you think, if it isn't an actual quote, it ought to be.

Anyway, the Truman character apparently is told by an invisible companion that some economists should be consulted. Part of the Truman character's reply is: "If you line up all the economists end to end, they'll point in different directions."

See what I mean? If Truman didn't say that, he should have.

Whether he said it or not, it sums up my feeling about the economy these days. Everyone's pointing in different directions.

In cautioning people not to make too much of the less–bad jobs report and the recent gains on Wall Street, La Monica observes, "Now this may seem overly gloomy. But it's not a case of being pessimistic as opposed to optimistic. It's just realistic."

And the reality for the unemployed is not that jobs are being added to the economy. It's that fewer jobs are being lost than expected.

It isn't the same thing at all.

In this case, less is not more.

The Streak Is Over ... Sort Of

Stocks posted gains today, but they weren't enough to offset recent losses for the Dow and S&P; 500, bringing their six–week streaks of gains to an end. But the Nasdaq finished the week higher for the seventh straight week so its streak goes on.

As Barack Obama has been saying for quite awhile now, investors can expect fluctuations until economic fortunes are reversed.

And I've heard many stock market observers say that, in a bear market, mini rallies happen but, at some point, the markets hit the wall. Is that what happened to the Dow and S&P; 500 this week? They only finished slightly lower this week. Is it possible they could have another positive week next week?

Seems possible to me, but I'm not an economist. I'm just a guy who hopes — like everyone else — that this recession will soon come to an end.

"[S]ome market pros are worried the run higher has been too much, too fast," writes Alexandra Twin for CNNMoney.com. " 'We have a market that after a six–week rally was vulnerable to a pullback, sold off 4% or 5% and is now looking to move higher again,' said Steven Goldman, market strategist at Weeden & Co."

Will the Nasdaq take a tumble next week? It's a possibility.

In this economy, anything can happen.

The News From New York

After the beating the stock market took on Monday, I didn't see how it would be possible for stocks to rebound and post a gain for the week.

Then, the stock market posted gains the rest of the week. But I still doubted there would be overall gains for a fourth straight week when the jobs report came out today, and joblessness went up to 8.5%. Surely, I thought, this will have ramifications on Wall Street.

Nevertheless, stocks rallied and finished in positive territory for the fourth straight week. I suppose, if I happened to be an economist, I might understand why this happened. But I don't.

"For the four–week period ended Friday, the Dow has gained almost 21%, according to early tallies," writes Alexandra Twin for CNN.com, "making it the blue–chip indicator's best four–week run since May 1933, when it gained 31%."

Of course, I suppose one can argue that, in May 1933, there was literally nowhere for stocks to go but up.

But there is other news — troubling news — from New York tonight. An as–yet unidentified shooter and a dozen other people are dead in Binghamton, a relatively small community about 150 miles northwest of New York City, following a shooting rampage in an immigration services center. More than two dozen people are confirmed injured.

This event is likely to be in the news for several days, at least, as investigators sift through evidence and details emerge about the shooter and his state of mind, but, whatever the facts turn out to be, it's a sobering reminder of how brief life can be.

Is the Party Over?

After three weeks of gains, the Dow Jones lost 254 points today amid concerns about the futures of the U.S. auto and banking industries.

Although the stock markets were up — on balance — last week, stocks slid Friday as well. One has to wonder if the stock market can possibly regain enough ground the rest of this week to keep the weekly streak of gains alive.

In a speech this morning, Barack Obama said the auto industry "had reached a critical point and that its transformation would be a painful but necessary process," writes Jack Healy in the New York Times.

Obama, who never seems to be at a loss for words although his policies have yet to produce any fruit, said, "Year after year, decade after decade, we have seen problems papered over and tough choices kicked down the road, even as foreign competitors outpaced us. Well, we have reached the end of that road."

And it seems the vehicle that brought us to that point may have broken down.

We may learn more when the employment numbers for March are released in early April.

The Rally Continues

The stock market lost some ground today, but it stayed in positive territory for the week.

That's the best such run since last May, writes Alexandra Twin of CNNMoney.com, but Twin reports a warning from Dean Barber at Barber Financial Group.

"[T]here is momentum here in the short run," Barber said, "but this is the classic bear market rally and investors need to be careful not to fall into the classic bear market trap."

Twin summarized the situation pretty well.

"[T]he advance has been based on hope that the recession will soon end because a lot of money has been thrown at the financial sector and the economy," writes Twin. "However, fundamentally, the economy remains in bad shape, as do the state of corporate profits."

So, I guess the bottom line is this:

It's fine to hope that this will be more than a temporary rally. There's always the possibility that it really is.

But those who have spent their adult lives observing the stock markets say this is likely to hit the wall — probably in the near future.

So enjoy it while you can.

Another Good Day on Wall Street

Stocks went up again today, and, unless tomorrow is a really terrible day, we should see a third straight week of gains.

" 'Up for the year to date' is a phrase that nobody in the stock market had heard for a long time. Until Thursday," writes Rob Curran for Dow Jones Newswires.

To put it in numerical terms for the day, "The Dow Jones industrial average rose 174 points, or 2.2% at the close," writes Alexandra Twin for CNN. "The S&P; 500 index rose 18 points, or 2.3%. The Nasdaq composite rose 58 points, or 3.8%."

The question most people seem to be asking is, does this mean the economy is stabilizing?

I'm inclined to say what I've been saying — that we won't be able to know that until we can look back at some point in the future and can see that things stabilized at a particular point.

No one was able to announce the start of the recession in December 2007, and no one can announce the end of it until well after the fact.

But, like everyone else, I'm looking forward to the day when the recession is behind us.

And I hope the gains in the stock market this month are signs that that time either is upon us or drawing nigh.

Things are looking promising right now. But let's remain calm and see where we're actually headed.

Will It Be Three Straight Weeks?

That's a question I can't answer. But it seems much more likely today than it may have yesterday.

I'm talking about the stock market, which posted overall gains the last couple of weeks. It picked up nearly 500 points on Monday, then it lost 115 points yesterday. Today, the Dow Jones gained 1.2%, and S&P; and Nasdaq picked up just under 1% each.

At the moment, it seems likely that the markets won't take the kind of hits that would be needed on Thursday and Friday to wipe out the overall gains in all three for the week.

As I've said many times before, I'm no economist. I don't know what this means. Does it mean the economy is starting to turn around? Will consumers start spending again, which will encourage employers to hire more people? Or will it prove to be a temporary reversal, followed by a steeper slide?

CNN's Alexandra Twin reports that "[a] pair of better–than–expected economic reports added to optimism that the economy is getting closer to stabilizing:"

• New home sales and


• durable goods orders.

Does this have any long–term implications for the economy? Well, sure, I guess — in theory.

But that's the thing, isn't it? Until it comes to pass, it's all theoretical.

Well, It Was Bound to Happen

After the stock market rallied for a gain of nearly 500 points yesterday, it was inevitable, I suppose, that some retrenching would be going on today.

"Stocks slumped in the morning as investors eyed the AIG hearing in Washington," writes CNN's Alexandra Twin, "cut losses in the afternoon and then slipped again near the close."

To keep things in perspective, though, the Dow Jones lost 1.5%, S&P; lost 2% and Nasdaq lost 2.5%. They could lose roughly the same amount each day for the rest of the week and still not entirely wipe out the gains that were recorded yesterday.

If that happens, the stock market will be on the plus side — although perhaps barely — for the third consecutive week.

How long has it been since that happened?

Good News, Bad News

Sometimes it seems that you can't get some good news without getting some bad news to balance it out.

Today is a case in point.

Thanks — apparently — to the Obama administration's plan to buy nearly $1 trillion in bad bank assets, the stock market posted its biggest one-day point gain since Nov. 21, which was four months ago — 497 points.

And, because the losses of the last four months have been so staggering, the single-day percentage gain — 6.8% — is the highest since Oct. 28, which was nearly five months ago.

And the S&P; did better than the Dow Jones today. It had its biggest one-day gain since Nov. 13. Its percentage gain was also its largest since Oct. 28, but S&P;'s percentage gain of 7.1% exceeded the Dow's.

But there was plenty of bad news in the newspaper business today:

• The Ann Arbor News announced that its last edition will be published in July. It will be replaced by a Web site called AnnArbor.com.


• Three other Michigan newspapers — the Flint Journal, the Saginaw News and the Bay City Times — are going to cut back to three publication days per week.


• The Charlotte Observer plans to cut its staff by 14.6% and reduce the pay of most of the employees it retains.


• The Tucson Citizen appears likely to fold if the Gannett Co. cannot find a buyer.

As CNN's Stephanie Chen observes, "Amid the decline comes concern over who, if anyone, can assume newspapers' traditional role as a watchdog. For more than 200 years, that role has been an integral part of American democracy."

Who will assume that role now? The internet?

Well, that seems to be the direction we're headed, but I have my doubts.

Good News ... Generally Speaking

Last Friday, folks were all abuzz about the good week Wall Street had.

The news wasn't especially good today as the Dow Jones lost 122 points (1.7%) — but, in the context of the entire week, the stock market rose for the second week in a row. That's the first time that has happened since last May.

Richard Campagna, chief investment officer at 300 North Capital, was philosophical about it all. "We were up sharply in just over a week, so giving something back is to be expected," he said.

He also cautioned people to bear in mind that things have been "less bad" on Wall Street this week — but that doesn't mean they have been good.

"It's not like the world has suddenly changed," he said.

That may be true, but these days, you have to find positive news wherever you can.

And having two straight weeks of gains in the stock market — even if investors have pulled back in the last couple of days — beats what we've been used to.

Let's hope we are still talking about gains this time next week.

Don't Get Too Excited

Thanks to a late gain today, the stock market advanced for the fourth consecutive day.

It's the best such streak the stock market has had since Thanksgiving.

When the market opens for business on Monday, the Dow Jones will be at 7,223.98, Nasdaq will be at 1,431.50, and S&P will be at 756.55.

And there is some (apparently) good news from Citigroup, reports CNN's Alexandra Twin. "Citigroup Chairman Richard Parsons told Reuters late Thursday that the company won't need any more government help and that it will stay a publicly traded company. The stock plummeted in recent weeks on fears that it would have to be fully taken over by the government. Last week, the government said it would lift its stake in Citigroup to as much as 36%.

"Citigroup said earlier this week that it was profitable in the first two months of the year. JPMorgan Chase and Bank of America have also said that the start of the year has seen some improvement."

It's good news that the stock market enjoyed its best week of the year, but does it mean the recession is nearing an end?

Well, I'm no economist, but it seems to me that a single week does not define an economic trend. This time next week, the gains from this week may be wiped out and we may be talking about the brutal week that Wall Street has just been through.

I hope that isn't the case because signs of a reviving stock market can encourage consumers to spend again, which will encourage employers to start adding people to the payroll. And, in an economy that has lost 4.4 million jobs since the recession began in December 2007 — and has been shedding more than 600,000 jobs a month since 2009 began — anything that leads to improvements in the job market will be welcome.

Especially since the normal rules of a recession don't apply to this one.

"This recession is incredibly broad-based," said Mark Vitner of Wachovia Corp. "Parts of the country that have traditionally weathered recessions fairly well are being impacted."

Of course, the question that people want to have answered is, "When will we hit bottom?" There is no simple answer to that — except that it's like the transition from winter to spring. The transition won't be obvious when it happens. It will only be apparent in hindsight, when we can look back at the numbers and realize that things began to turn around at a particular time. I don't recall hearing anyone, back in December 2007, announce that a recession had begun. It will be about the same when the recession ends.

Michael Silverstein at The Moderate Voice blog tries to apply some logic to what's happening on Wall Street. "Is this a bad thing? Nah. It's actually quite a good thing. If it makes people generally feel better about markets they may shop more, and if they are employers maybe fire less. And when you get right down to it, since the whole ecology of economies is basically sustained by belief or lack thereof, we really needed this kind of boost."

But Silverstein reminds readers that there are other factors that can affect the market.

"Now if only Pakistan holds together, Israel doesn't nuke Tehran, no major world leader is assassinated, and a volcano in Indonesia doesn't turn the world's summer to winter," he writes, "we may have a bit of a market-based economic upturn in coming months."

So hold off on popping those champagne corks.

Let's see what happens next week — and the week after that and the week after that.

The Daily Decline

It seems to be a daily occurrence now — the triple-digit drop in the stock market.

Last week, the news was about the 777.68-point drop in the stock market — the largest single-day decline in history (exceeding the previous record of 684.81 points on the first day of business following the Sept. 11, 2001 terrorist attacks).

Yesterday, "[t]he Dow Jones Industrial Average fell as much as 800 points to trade below the 10,000 mark," reports Nick Godt of MarketWatch, "as nervousness over the credit crisis spread."

Eventually, as Godt reports, "hopes of a coordinated intervention to stop the bleeding in global markets helped the Dow recoup half of its losses, to close down 369 points, or 3.6%, to 9,955."

And he reports hopeful speculation that the markets could experience a "bounce" today — if there is a "coordinated rate cut by the three main central banks."

I wouldn't hold my breath waiting for that — although I guess it exists in the "anything is possible" realm.

It's one of life's ironies that it was only a year ago (on Oct. 9, 2007) that the Dow Jones Industrial Average closed at the record level of 14,164.53 points.

And now, around one-third of that volume has disappeared. It seems to have vanished into thin air.

John McCain and Barack Obama are scheduled to hold their second presidential debate tonight. It will be done in the "town hall" format — first used in the 1992 presidential debates — in which members of the audience ask the questions in a freewheeling debate with no topic restrictions.

You might remember that 1992 debate. A man with a ponytail chastised Bill Clinton, Ross Perot and George H.W. Bush for their negative campaigns and tried to get them to promise to stop it and focus on the issues. His effort didn't succeed — but it was memorable.

I wouldn't be surprised if several questions tonight deal with the stock market and the financial crisis. That is what most affects Americans today.

The American people are entitled to know what the men who want to be the next president will do about the problem.

"Voters should demand that Mr. Obama and Mr. McCain level with them," writes the Dallas Morning News.

It seems to me that the truth is up for grabs.

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"Did you hear about the U.S. senator who dared to utter an inconvenient truth about the poor quality of U.S. leadership and followership in taking on the looming entitlements disaster?
  "'In what I regret to call a conspiracy of silence among all of the presidential candidates and most members of Congress, few of us are willing to talk about the real problem,' he said. 'Why? Because of the fear that if you address the issues honestly, you will lose votes — and possibly the election.'
  "That brave senator had one colleague who rose to agree with him, saying of the Congress, 'Deep down in our hearts we know that we have bankrupted America and that we have given our children a legacy of bankruptcy. We have defrauded the country to get ourselves elected.'
   "Good, right?
  "Actually, it's depressing. Why? Because Sen. Warren Rudman, R-N.H., and Sen. Jack Danforth, R-Mo., made those statements, respectively, in 1992.
  "Both left the Senate at the end of their terms. Nothing has changed — except that we're 16 years closer to the day of fiscal reckoning that will make this bleak and anxious autumn seem like a season in the sun."

   Dallas Morning News

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