Chris Cantell Discusses Markets: Moderate decline after Monday´s massive advance by Zuzana Zelenakova

After stock markets soaring on Monday Wall Street has declined a bit with Dow Jones industrials loosing about 76 points. On Monday news arrived that Bush administration planned to inject $250 billion into the major US banks receiving their stocks in return. Of course the reaction of the markets and investors came with the massive advance. This move has helped to lift the shares of big banks, which were slumping gradually throughout the year. On Tuesday the shares of Bank of America, Citigroup, Wells Fargo and others rose more than 10 percent. With the anticipation of the government´s plan the stocks went up immediately. Currently the situation on the stocks markets is calmer with stocks pulling back. Some of what was gained on Tuesday was lost the following day. The story is similar in Europe. London's FTSE-100 and Frankfurt's DAX fell 1.5%, and Paris' CAC-40 lost 1.2%. "We don't know if the bottom is in," said Lincoln Anderson from LPL Financials referring to the sudden advance on Monday following enormous losses last week. "We certainly expect heightened volatility for a fair amount of time while we sort out just exactly what's going on." Current rescue plan aims to recapitalize banks. "This begins to penetrate the core of the problem," said Peter Cardillo from the brokerage house Avalon Partners Inc. On the other hand Robert Dye, senior economist at PNC Financial Services Group, says: "These steps are not going to turn the real economy on a dime. The two keys to the fundamental economy right now are the job market and the housing market and both of those remain distressed." Experts on financials are divided in their conviction whether the worst lows are behind the stock markets or not. However, the latest reports indicate that banks´ reluctance to lend to each other could be gradually declining.


related story: http://news.yahoo.com/s/ap/20081014/ap_on_bi_st_ma_re/wall_street;_ylt=AkylJaErefCLE7IrMgzGDcOs0NUE

by Zuzana Zelenakova for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova