Early Look: Financials Lead Market Bounce
I think yesterday's selloff was part options expiration, part the drop in the dollar, and part concern over whether the bailout plan will be quickly passed, and if any of the details will change. Last week's market lows were pretty climactic, and I think that they will mark the lows for this year.
The market is bouncing in early trading, while most eyes are watching the Senate Banking Committee hearing where key officials are giving their testimony on the proposed plan. The media is calling this a Wall St. bailout plan, but I think that is putting a negative connotation on it.
Wall St. has already seen its landscape forever changed, as well as key investment bank failures. I'm not saying I feel bad for them, and the role they played, but I think this plan is needed to save Main Street, and I hope that comes across.
Oil had a big spike yesterday, but is was somewhat of a mirage. Oil trades in futures, and it was only the October contract that saw that big spike to $120. That contract expired yesterday, so there was likely a great deal of short covering. Today, the November contract is the prevailing contract, and it is trading closer to $108.
The dollar is bouncing today, after yesterday's sharp drubbing. This is pressuring commodity stocks, which were in the spotlight yesterday.
GE is lower after being downgraded by Merrill Lynch. Merrill said that earnings will be lower at GE's Commercial Finance and GE Money divisions. Bristol-Myer (BMY) raised its offer to buy Imclone (IMCL) to $62, or $4.7 billion.
The 10-year yield is steady at 3.81%. The volatility index (VIX) is -3.5% lower to 32.68, but I would like to see it drop below 30 as a sign some of this fear is subsiding. The Dow is currently +100 points.