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Markets Open Slightly Down

Wall Street opened down this morning, as the markets continued to move sideways since the beginning of the month.

In the first 15 minutes of trading, the Dow was down 23 points, or a third of a percent.

The broader S&P 500 was down half a percent, while the tech-heavy Nasdaq was down nearly 1 percent.

The markets seemed to be on an unstoppable surge since hitting their most recent bottom in early March.

But that stopped right around June 1. Since then, the Dow and the S&P 500 have have been flat, though the Nasdaq has continued a moderated rise.

The markets have reached an interesting place: They are at the halfway point between their all-time highs of October 2007 and their most recent lows of March 2009.

For instance, the S&P 500 is down 39 percent from October 2007 and is up 38 percent from the March lows.

So the markets appear to be pausing at their halfway point. But halfway back to what? How long will it take until those October 2007 highs are regained?

The wagering here is that it will take a lot longer than it did before, if only because the previous highs were fueled by leveraged-based earnings. Big financial institutions leveraged up to 30-to-1 debt-to-equity ratios, which turbocharged earnings.

Those kinds of leverage ratios are gone the way of the dodo. Heck, they might be made illegal by this Congress.

-- Frank Ahrens
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By Frank Ahrens  |  June 12, 2009; 9:50 AM ET
Categories:  The Ticker  | Tags: Dow Jones, nasdaq, s&p 500  
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