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Late-day rally ends down bad day on brighter note

stocks.jpg
Gallery: Stocks tumble worldwide on euro worries, rising tension in Korean Peninsula

UPDATED at 4:08 p.m.:

Stocks staged a strong rally beginning at about 2 p.m. today and wiped out most of the losses of an abysmal opening.

After falling nearly 300 points at opening, the Dow closed down two-tenths of 1 percent at 10,043.75. The Dow is down nearly 9 percent for May.

The broader S&P 500 actually made it back into positive territory, closing up less than one-tenth of 1 percent at 1,074.03, just topping the 1,066 resistance level. The S&P 500 is down nearly 10 percent for May.

The tech-heavy Nasdaq closed down one-tenth of 1 percent at 2,210.95.

Today's rally may be a buying spree because stocks have fallen so far, making them a good bargain. That's better than another day's plunge, but it's not growth based on strong underlying fundamentals, and that leads to a volatile market, not a steady-growth market.

Oil closed down 1.3 percent at just under $70 per barrel.

The euro nudge up just a bit against the dollar, now trading at $1.24. The yen is trading lower against the dollar because of the turmoil in Asia.

If stocks didn't have enough to worry about already -- Europe "teetering on the brink of financial disaster;" continued concerns about a sluggish U.S. recovery -- now pinwheel-eye-crazy North Korea is threatening war with South Korea. NoKo is basically telling SoKo: "We didn't sink your ship! You'd better not punish us for something we didn't do! (Even though everybody else in the world thinks we did.)"

The U.S. already was facing economic threats in two hemispheres, as plenty of folks think the civil unrest in Thailand, though quashed, is only the first of many civil uprisings among the have-nots of the Asian nations.

Now throw in a potential war on the Korean peninsula, and U.S. stocks are understandably spooked.

Europe closed poorly today, as well, about an hour ago. London's FTSE closed down 2.2 percent. Germany's DAX closed down 2.3 percent. France's CAC 40 closed down 2.9 percent.

Herman Van Rompuy, president of the European Council, was forced to give a "nobody panic!" address at the Brussels Economic Forum today. Quoting from the release.

"We are not in monetary Armageddon," Van Rompuy said, noting that in tackling the crisis the EU "…did reasonably well. We stumbled, but we did not fall." In drawing lessons for the future, Van Rompuy said that the EU would not solve its budgetary problems without more structural economic growth without which, "We risk a negative spiral; in the short term, the acceleration of fiscal consolidation will hamper growth only marginally. I am even convinced that lower deficits will enhance consumer confidence and stimulate economic growth."

There are a range of things that could happen on the Korean Peninsula, and most of them are bad for the Koreans and the U.S. economy.

The worst case, of course, is war. But the best case -- collapse of the Stalinist NoKo regime -- would present its own problems, as well. Prosperous SoKo would be flooded by millions of hungry, under-trained NoKo refugees. The reuniting of the Korean Peninsula would make the German unification look like a piece of cake.

The nearly worthless East German currency devalued the German mark for years because it was priced at par after the Berlin wall collapsed. The West German labor market was flooded with lower-priced East German workers, which also hurt the economy. But even though East Germany was behind the Iron Curtain, East Germans weren't as cut off from the rest of the world as North Koreans, who are essentially isolated in the Stone Age.

Here's a good piece from Blaine Harden, Our Man In Seoul, asking "What's in this for Kim Jong Il?"

In the Seoul English-language newspaper, Joongang Daily, South Korean President Lee Myung-Bak said his nation will adopt a stance of "proactive deterrence." The government appears poised to designate NoKo as the South's "main enemy."

Meanwhile, the South Korean currency, the won, has been driven to nine-month lows and the main Kopsi stock exchange is at its lowest point since February.

Then there's this: If Europe and Korea weren't bad enough, this piece in the WSJ suggests that a projected slowdown in growth in global-economy-engine China could lead to a double-dip recession in the U.S.

By Frank Ahrens  |  May 25, 2010; 4:08 PM ET
Categories:  The Ticker  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Hilarious Aussie video explaining Europe's impossible debt problem
Next: Video: Talking about trouble in Korea, stocks, financial regulation and taking your questions

Comments

Obama's ineptness is driving the markets down.

Posted by: nychap44 | May 25, 2010 1:08 PM | Report abuse


Barry the incompetent boob Obama is responsible for the financial mess we are in. Ten percent unemployment, quadrupling the federal deficit, and your retirement nest egg is going down the drain with the stock market.

Miserable failure Obama

Posted by: screwjob15 | May 25, 2010 1:09 PM | Report abuse

no problem

congress legalized stealing for over 20 years now

so don't worry about nothing

dem/publicans are in control !

Posted by: ryan_heart | May 25, 2010 1:13 PM | Report abuse

Do you believe the writer or the CBO figures on Q4 growth? Nuff said.

Posted by: jameschirico | May 25, 2010 1:36 PM | Report abuse

Huffington
Co-founder and editor-in-chief of The Huffington Post

It's mission accomplished for financial reform. Unfortunately, it's more of a Bush 43 "mission accomplished" than an Apollo 13 "mission accomplished." That's because the financial reform bill passed by the Senate last week, like Bush's ship deck ceremony, is more notable for what it has left undone. There's a reason a longtime investment banker said of his colleagues' reaction to the new bill, "If you talk to anyone privately, there's a sigh of relief." Don't expect a similar reaction on Main Street. Despite its name, the Restoring American Financial Stability Act of 2010 will not be restoring financial stability to the tens of millions of hardworking Americans whose lives have been turned upside down by the economic crisis. On nearly every front in the real economy -- from jobs to lending to consumer spending to foreclosures -- we've made virtually no progress at all.

Posted by: micholina | May 25, 2010 1:38 PM | Report abuse

Once again with the fear and panic.

Here's a news flash - the margin on govt securities in Spain and Portugal is still at record lows - one-tenth what it was for most of the last 20 years - and the Yuan being repriced and Americans buying US debt is a GOOD thing.

Only a fool would sell today.

Posted by: WillSeattle | May 25, 2010 1:40 PM | Report abuse

Stocks tumble on Obama worries--quit kidding yourself. Incompetence, lack of confidence and waiting to see when the next shoe will fall (and what it will be) cause the market to fall. But, at least in San Francisco you can get gas for 3 something a gallon.

Posted by: Mindboggle | May 25, 2010 1:41 PM | Report abuse

The US recession dragged the rest of the world down. Now the rest of the world is returning the favor. America used to be a leader in everything - now we are a bunch of boobs. We need to start leading again, inventing, discovering and exploring. We are going backwards each and everyday and as proud Americans we should be embarrassed and ashamed - we should want to go out and show the world again that we are leaders.

Posted by: lvdave | May 25, 2010 1:47 PM | Report abuse

No doubt about it. The yo yo of the fundamentally flawed economic system is swinging wildly up and down. Soon enough the god father of the Mafia structured private entity the Fed Reserve will cook up yet another scheme for the insiders to start making monster profits. All while buying low and selling high as it happened in the last four months of the nit wit Bush Presidency.

Posted by: winemaster2 | May 25, 2010 1:51 PM | Report abuse

All the while we are distracted there is a 165 billion dollar union give away making its way through congress. The collapse of the American economy is Obama's goal. His vision of his New World Order kingdom.

I can't believe how many Americans were tricked by the MSM into hating Bush enough to allow our country to be destroyed in 2 years by a narcissistic neo-communist.

Posted by: Straightline | May 25, 2010 1:53 PM | Report abuse

So how's that hopey-changey thing working out for ya?

Posted by: leafgreen | May 25, 2010 2:07 PM | Report abuse

1st, economic problems in Europe were caused by near collapse of US economy in 2008
What economic problems Europe is having, is primarily the result of and was initiated by the near collapse of US economy in 2008 and 2009. For 2 reasons: 1st, on a very basic level many European investors, whether private or banks, lost 100s of Billions of Dollars in their US investment, whether from collapse of Lehman Brothers, to total fraud of Madoff, to their investment in US real estate, etc. etc. 2nd, people and businesses in Europe finally saw what a hoax, what a lie, what lunatics, Republican in US were which ideas had influenced much of their decision making in Europe.

With the above said, European union, of which Greece is a very small part of, will continue to get richer and richer compared to American Union (aka USA) as evident by how MUCH MORE valuable Euro is compared to US Dollar.

WHY?
Because Europeans are not suffering from a party of Lunatics as US is with the Republican party and Europe is not suffering from a right-wing (aka Lying) war-mongering media as US is with such lying machines as Fixed news, Talkradio, Wall Street Journal, CNBC, etc. etc., as a result of which:
1- European Governments invest much more of their People's money (Taxes) in their people and cities via such things as Universal nationalized health care, Universal education to Ubiquitous (electric powered) public transportation etc.
2- European Governments do not waste their people's money on Unnecessary Wars (Iraq War, Vietnam War, etc.) or on a Gargantuan Military

Much more here:
http://RealNewsPost.com?n=Europal.39732

Posted by: WorldTraverler | May 25, 2010 2:10 PM | Report abuse


OBAMA AND THE DEMOCRATS ARE STEALING FROM ALL YOU PRIVATE SECTOR WORKERS TO GIVE TO THE LAZY WORTHLESS GOVERNMENT WORKERS.

ARE YOU GLAD YOU VOTED FOR HIM NOW?


By Dennis Cauchon, USA TODAY
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.
At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

Posted by: charlietuna666 | May 25, 2010 2:42 PM | Report abuse

Remember this progressive socialist argument from the last year?

"We are the only Western industrialized nation without nationalized healthcare and we must follow Europe's lead"

I love watching progressive socialist's arguments & policies collapse before our eyes. The Democrats have controlled both houses of Congress since 2006 and the progressive socialists have controlled the country since 2008, yet they still can't take responsibility and are still trying to blame it on Bush.

Their excuses are getting old! The progressive socialists running this country didn't want a fair debate, now they have made an even bigger mess of things!

Posted by: ChicagoBob | May 25, 2010 2:43 PM | Report abuse

OBAMA AND THE DEMOCRATS ARE STEALING FROM ALL YOU PRIVATE SECTOR WORKERS TO GIVE TO THE LAZY WORTHLESS GOVERNMENT WORKERS.

ARE YOU GLAD YOU VOTED FOR HIM NOW?


By Dennis Cauchon, USA TODAY
Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.
At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

Posted by: charlietuna666 | May 25, 2010 2:46 PM | Report abuse

It's amazing to see how gleeful the commentors here about the hiccup. It borders on the unpatriotic to celebrate when the market slumps.

Posted by: wd1214 | May 25, 2010 2:48 PM | Report abuse

Europe simply can't support a socialist system of government. USSR couldn't - Putin even warned US in February, 2009 not to follow the path of socialism.

We can't support 2 systems of large governments (State PLUS Federal) with all the progressive socialist programs and fraud.

The solution is to repeal the 16th Amendment, abolish the IRS, establish a national sales tax or "fair tax" system, get big government off our backs, and unleash the spirit of the American people to save this economy and the world's economy!

Posted by: ChicagoBob | May 25, 2010 2:50 PM | Report abuse

To Republican lunatics like: ChicagoBob

1st, One of the amazing things, but very typical, by products of the debt problems in Greece has been for the right-wing US Media to state that:
"Look how bankrupt Greece is due to their generous social services such as Universal Nationalized health care, if we are not careful we will end up like Greece...."
Which is utter complete non-sense. but again totally typical of right-wing US Media that it twists any events in support of its position that "Government run health care is bad..." and leads to bankruptcy when the EXACT OPPOSITE is the case here and the lesson to draw from the financial difficulties in Greece. That is IF Greece did not have not for profit Universal Nationalized health care as they have in Germany, UK, France, etc. then Greece debt and deficits would have been much worst than they are now, because health care in Greece as in all European countries is taking about 9% of the GDP while every person has health care and NO Greek or European is going bankrupt due to health care costs while in US that does not have Universal Nationalized health care, health care is taking a back breaking 18% of the GDP and 2Mill+ Americans go bankrupt each year due to health care costs.

OTN, can you Republican lunatics read even simple numbers!!! IF you can then you could see that Euro is MUCH MORE VALUABLE than US Dollar. Did you get it? Again, Euro is MUCH MORE VALUABLE than US Dollar, and not less.

Much more here:
http://RealNewsPost.com?n=Europal.39732

Posted by: WorldTraverler | May 25, 2010 2:53 PM | Report abuse

any good figures based on a contracted economy go bad when based on the economy one year before the 2008 election...
the x factor is the number of people that need jobs...
current figures exclude these people...
but there are so many...
and make current good figures phoney...
create jobs...
save our country...

Posted by: DwightCollins | May 25, 2010 3:01 PM | Report abuse

I am gleeful, because I can no longer be called a "racist" simply because I opposed President Obama's socialist policies.

I am gleeful because I can no longer be labeled "stupid" or "illiterate" by progressive socialists, simply because I don't like their plan of turning the U.S.A. into a socialist nation.

I am gleeful because some in the media are seeing the dangers of a progressive socialist state and are starting to act responsibly and deliver news objectively.

Welcome to the information age!

Posted by: ChicagoBob | May 25, 2010 3:05 PM | Report abuse

Actually, a friend of mine is looking at going to Europe this summer - I'm kind of hoping the EU returns to sane levels - say in the $1.02 USD to $1.10 USD range.

Want to fix the fear aspect? Get the EEC to meet and drop Greece from the EU monetary unit until they have five years of externally audited real GDP growth and balanced budgets.

Posted by: WillSeattle | May 25, 2010 3:07 PM | Report abuse

if people really think that about what happened in Thailand it just shows they are clueless about what really happened there. The BBC and CNN bought the red leaders' line about haves and have-nots. But what it was really about was one set of corrupt politicians trying to wrest power from the set that currently holds it. Simple as that. Unless other Asian countries have billionaire exiles who were ousted in a coup trying to regain power I wouldn't worry too much about what happened there spreading.

Now the Kyrgyz situation might be more plausible to see spread to other places. But most Asian countries with large wealth disparities are in the hands of pretty powerful elites with enough military might behind them to crush any uprising. Who do those Einsteins on Wall Street think are going to rise up? The Koreans? The Japanese? Those are stable countries. Places where it might happen have small economies and are not much to worry our economy.

Posted by: fedssocr | May 25, 2010 3:13 PM | Report abuse

"You'd better not punish us [North Korea]for something we didn't do! (Even though everybody else in the world thinks we did.)" Sounds like Iraq's Sadaam Hussein in 2003, doesn't it? Think about it, folks. Do you feel lucky? Can you take the chance that the seeming agressor is not really aggressive? Do you feel lucky? Well, do you?

Posted by: DoTheRightThing | May 25, 2010 3:28 PM | Report abuse

Can someone please write a story on how Wall Street is shorting the future and purposefully driving the market down?

This happened with oil a year or so ago. Now they are making money shorting Europe, selling major American stocks and then buying them back quickly, making tons of money. Wall Street has been involved in all loans to Greece, old ones and the new ones, for example. They make money of timing and excess capital.

I am not a conspiracy guy but I get the sense that Goldman and Morgan Stanley and Citibank are trying to peevishly strike back at the US government of trying to discipline them in the interests of our country.

Posted by: walden1 | May 25, 2010 3:34 PM | Report abuse

Hey WorldTraveler is this man a Republican lunatic also?

"In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated."

Vladimir Putin's warning to U.S. not to follow socialism
February 19, 2009

Or are you going to blame the collapse of the U.S.S.R. economy on George Bush as well?

Posted by: ChicagoBob | May 25, 2010 3:35 PM | Report abuse

Remember this progressive socialist argument from the last year?

"We are the only Western industrialized nation without nationalized healthcare and we must follow Europe's lead"

I love watching progressive socialist's arguments & policies collapse before our eyes. The Democrats have controlled both houses of Congress since 2006 and the progressive socialists have controlled the country since 2008, yet they still can't take responsibility and are still trying to blame it on Bush.

Their excuses are getting old! The progressive socialists running this country didn't want a fair debate, now they have made an even bigger mess of things!

Posted by: ChicagoBob
==========================================================
If you want to start a clock on the budget from Obama being wholly his you better start in Nov. 2009. 06 for those that know was a continuing resolution (05 budget). The budget signed by Dubya ended in Oct. 09. Going from job loss peak in Jan. 09 to creating jobs today, saving a million jobs with GMs bailout and more with 350 billion in stimulus in a sales and service economy may be unsustainable but in my view needed. Health care gets bennies/funding upfront, costs later reducing the need to borrow. Too bad they had to get rid of the upfront 50 billion from banks in the financial regulatory bill passed, that would have helped too with no 10 billion loss if bankruptcy costs are not recouped.

Posted by: jameschirico | May 25, 2010 3:45 PM | Report abuse

Why would stocks worry? Aren't we taking anthropomorphism to an unhealthy and silly extreme? If the stocks are worried, gosh help the investors who own them. I'm shaking in my shoes for the Post.

Posted by: public-washingtonpost-com | May 25, 2010 3:57 PM | Report abuse

I don't understand where the people who say Obama's responsible for the economic meltdown come from. Unless they were born yesterday or from outer space and have no clue as to what happened in the past 10 years, they could not possibly blame it on Obama. Obama's merely trying to fix the problem caused by the greed and chenanigans by the bankers, politicians, etc. Can you not see beyond the tip of your noses? By the way, I'm an Independent. Good grief! I'm just being so fed up with the irrational and ignorant rambling. We, collectively, although I haven't, lived beyond our means for a decade and now it's time to pay up, simple. Why can't people understand that?

Posted by: pelohoki | May 25, 2010 4:32 PM | Report abuse

Obama's ineptness is driving the markets down.

Posted by: nychap44
=================================

REALLY ???
You must suck at the Stock Market.
AND
You should not have voted for Bush TWICE..
But
you still would have sucked.

Posted by: godwithfire55 | May 25, 2010 4:35 PM | Report abuse

Not to worry, The Tricky Kenyan has it all under control. Just ask him !

Posted by: dashriprock | May 25, 2010 4:36 PM | Report abuse

If you truly want to know what is going on; Then you will have to accept these things as the TRUTH. Once you understand the following things; All things will be understood. So I tell you Obama is the Anti-Christ, Satan on Earth, Lawless One, or what ever else you want to call this Demonic Figure. His words describe him, He is a False Hope, If you listen to him you will love him. He carries a Bow without an Arrow. He will conquer all through his speech, his false hoods will capture all who sit and listen to him.

Posted by: makom | May 25, 2010 4:51 PM | Report abuse

As always, Money McBags breaks down today's market movements to help you all understand what is happening. Europe going to 0, the Koreas going at it, and insolvency fears lead the way.

http://whengeniusprevailed.blogspot.com/

Bottoms Up,

Money McBags

Posted by: moneymcbags | May 25, 2010 5:04 PM | Report abuse

Home values are diving again
As Fannie and Freddie have been
Left out of the Bills
That cure all our ills
Except those that matter to men

Posted by: wpjunk1 | May 25, 2010 5:10 PM | Report abuse

That Plunge Protection Team was back at work for the close. They won't give up Dow 10,000 without a fight. If they do, all the other Ponzi ops come undone quickly.

If anybody is still searching for what is commonly known as fair value, the Team will fight it out with you tooth and nail.

Posted by: bandcyuk | May 25, 2010 5:20 PM | Report abuse

The Congress That Couldn't is near
Progressively feeding the Fear
of looming collapse
and dooming perhaps
a full blown recovery here

Posted by: wpjunk1 | May 25, 2010 5:37 PM | Report abuse

It took GW 8 years to create this mess. It's going to take Obama at least that long to unravel it.

Posted by: drossi2 | May 25, 2010 9:30 PM | Report abuse

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