Quite a lot of analysts and investors were hoping that the rally that Wall Street sustained for more than two months was a sign of better things to come. However, the tumble that the indexes sustained last week might show that optimism should be tempered with reason.
Stocks tumbled to as much as 12-year lows for several indexes early Marched but got a much needed rally. Last week saw the rally slow down as the Dow, Nasdaq and the S&P 500 all posting loses. Again, the market was hit by weaker-than-expected reports on retail and jobless claims.
The ailing auto industry also had a part in the tumble. Chrysler announced that it will be cutting 25% of its dealerships and GM, in a similar move, said that it will be starting to cut the first of the 40% of its dealerships. Of the Detroit 3, GM is in the worst shape, still sorting out its bankuptcy issues.
Investors are now hinting that they might have jumped the gun on the market – that the worst part of the recession has not passed yet. The rally was sustained by several better-than-expected (but still bad) profit reports and companies that have announced that further bailout from the government would not be needed given better company outlooks.
Source: CNN
