What's Bringing Back the Markets Today?
With about 45 minutes to go in the trading day, Wall Street is threatening to go positive across the boards for the first time today, after diving off a cliff at the opening this morning.
One word: banks.
The Dow, the S&P 500 and the Nasdaq all dove more than 1 percent at opening today.
Now, the Dow is only about seven points underwater, and the Nasdaq and the S&P 500 have both climbed back into positive territory.
The intraday rally, analysts are saying has been caused by the financial sector, with shares of Bank of America and Citigroup leading the banks rally.
The KBW Bank Index, which tracks 24 of the nation's largest banks, is up more than 6 percent on the day.
Traders are hoping -- betting, really -- that as earnings come out this week, retail banks such as Citigroup and Bank of America will be able to match Wells Fargo's eye-popping $3 billion quarterly profit estimate, which came out last week. Or, if not match it, at least not show massive losses.
Part of today's rally is also come from short-covering, or short-sellers who are buying stock to cover wrong bets that the financial would actually post losses this quarter.
There is one reason not to get too excited about this news: A sector that has lead an economy into a slump rarely leads it out. For instance, tech stocks didn't lead the economy out of the tech bubble burst.
It was financial sector that led the economy into this recession. If they can lead it out, they will be fighting history.
April 13, 2009; 3:21 PM ET
Categories: The Ticker | Tags: Bank of America, Citigroup, Dow Jones, banks, nasdaq, s&p 500
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