Stocks Rebound After Huge Drop

uscitizen

uscitizen

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Stocks Rebound After Huge Drop

Jan 18, 10:25 AM (ET)

By MADLEN READ

NEW YORK (AP) - Wall Street bounced higher Friday as a strong outlook from IBM encouraged investors to buy back into stocks after their huge drop this week. The Dow Jones industrial average rose more than 170 points.

The University of Michigan's index on consumer sentiment helped kindle the rally. The index, which most economists expected show a decline for mid-January, rose instead. Though not a perfect predictor of consumer spending, the report gave investors some hope that Americans' buying might not drop off too precipitously amid worries about a recession.

The market remains extremely skittish, however. The Dow, having suffered its worst three-day plunge in over five years, has fallen to levels not seen since last March.

http://apnews.myway.com/article/20080118/D8U8CB0O0.html
 
uscitizen said:
Stocks Rebound After Huge Drop

Jan 18, 10:25 AM (ET)

By MADLEN READ

NEW YORK (AP) - Wall Street bounced higher Friday as a strong outlook from IBM encouraged investors to buy back into stocks after their huge drop this week. The Dow Jones industrial average rose more than 170 points.

The University of Michigan's index on consumer sentiment helped kindle the rally. The index, which most economists expected show a decline for mid-January, rose instead. Though not a perfect predictor of consumer spending, the report gave investors some hope that Americans' buying might not drop off too precipitously amid worries about a recession.

The market remains extremely skittish, however. The Dow, having suffered its worst three-day plunge in over five years, has fallen to levels not seen since last March.

http://apnews.myway.com/article/20080118/D8U8CB0O0.html
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Dow is up 43
 
DigitalDave said:
They were up around 125 earlier, but it's declining again.
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Yeah, the story covers that:

"The market remains extremely skittish, however. The Dow, having suffered its worst three-day plunge in over five years, has fallen to levels not seen since last March."

As I said, buy and hold some gold until the bottom hits then buy your stocks. I would look at the banks that alraedy took their stupid loan hits, they'll be bottomed out at about that time....


Just a suggestion. <insert disclaimer here> Investing is a risk.
 
What happens when the bond insurers go belly up? Really. I have no idea. What happens? Anyone care to inform an ignoramus? It seems like a pretty big deal.
 
bonds go belly up it will suck bigtime and hit many pension plans.
ot that is my thoughtsa on it. experts comments ?
 
Superfreak said:
What happens? Duck and cover..... cause you do not want to see it.
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Isn't it on the horizon though? I read this today:

MBIA Inc. and Ambac Financial Group Inc., the two biggest bond insurers, have a more than 70 percent chance of going bankrupt, credit-default swaps show.

Prices for contracts that pay investors if Armonk, New York- based MBIA or New York-based Ambac can’t meet their debt obligations imply a 73 percent chance the companies will default in the next five years, according to a JPMorgan Chase & Co. valuation model.

Ambac shares plunged 52 percent yesterday and rose 11 percent today to $6.94 in early trading on news the company was scrapping a plan to raise equity. MBIA dropped 31 percent yesterday and rose 0.9 percent in early trading today to $9.30. Credit-default swaps on the companies, which rise as confidence erodes, are trading at record highs.
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And then for giggles I checked Ambac's stock. This is the 6 month view:

abk



Is it time to duck and cover?
 
Damocles said:
They then become "junk bonds". I don't do bonds so... ask SF.
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Typically bonds that get the insurance are not strong enough to get a AA or even an A rating and thus they pay the insurance to get the AAA status. This enables them to pay lower interest rates. More than likely many of the invidual bonds would drop to BBB status, possibly to junk status but not in great numbers.

Junk bonds (non-investment grade) are there for one of two reasons....

1) They came out originally with investment grade ratings (BBB and above) and their financials have deteriorated and caused a downgrade.

or

2) They came out originally with junk ratings because they did not qualify for higher ratings and could not afford insurance. These will typically be the junk bonds with higher coupons.

The problems with the insurers is that the idiots insured the CDOs and SIVs that are blowing up right now. That is going to hurt them... bad.

My guess is that you see some sort of government bailout. Either direct or indirect. Indirect would be the Fed stepping up to the wirehouses/banks that bundled these securities in the first place and "encouraging" them to help.
 
Dungheap said:
Isn't it on the horizon though? I read this today:



And then for giggles I checked Ambac's stock. This is the 6 month view:

abk



Is it time to duck and cover?
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Bush is speaking right now.... so yes. If you are a stockholder in the insurance companies like MBIA etc... the time to duck was several months ago after the initial ass kicking.
 
Superfreak said:
Bush is speaking right now.... so yes. If you are a stockholder in the insurance companies like MBIA etc... the time to duck was several months ago after the initial ass kicking.
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But what effect does the bond insurers going under have on the overall economy? Municipal bonds, etc. . .
 
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