The stage was set for an ugly week. On Wednesday, with the stock market looking as fragile as it has in months, the New York Stock Exchange abruptly shut down, just after United Airlines grounded its planes due to a network failure. China was trying unsuccessfully to bootstrap its market, and Greece was seen as exiting the euro zone. Through it all, our colleagues at The Wall Street Journal couldn’t even post the news for a time, after their Website briefly went dark.
“You had the recipe, in the middle of the week, for a very quick correction,” says Hank Smith, chief investment officer at Haverford Trust, who notes it has been almost four years since stocks’ last 10% decline. “It’s very easy to get conspiratorial.”
“We wake up the next day, and there was an answer for the NYSE—a software upgrade. China’s market is recovering a little bit. And it looks like Greece and the various European Union regulators are going to come to agreement. It’ll be a welcome relief to get Greece off the front pages of every newspaper in the country.”
As quickly as it came, the fear of a correction was gone, driving Friday’s broad rally, in which the Dow Jones Industrial Average rose 1.2%. The Dow finished the week up 30 points, or 0.2%, to 17,760, while the Standard & Poor’s 500 index finished flat at 2077. The Nasdaq Composite slipped 12 points, to 4998.
Investors’ willingness to embrace tidy answers to big concerns is another sign of the bull market’s durability. The economy looks good enough to keep investors happy, and there’s little angst about the coming wave of second-quarter earnings announcements. Alcoa (ticker: AA) kicked off earnings season last Wednesday. The aluminum maker missed estimates, but more important financial bellwethers are on tap this week. JPMorgan Chase (JPM) and Wells Fargo (WFC) report on Tuesday, Bank of America (BAC) on Wednesday, and Goldman Sachs (GS) and Citigroup (C) on Thursday.
(Source: Barrons Online)