The stock market has been a terrifying place of late, but there are still investors brave enough to buy shares of U.S. companies.
Monday the U.S. stock market again resisted a wave of global selling, recovering from a sharp drop earlier. The Dow Jones industrial average was up about 90 points, or 1 percent, in early afternoon trading.
Still, none of the factors driving the sell-off has changed. Investors around the world have been dumping stocks. Hedge funds in particular are liquidating as the yen carry trade, borrowing in low-interest yen and investing in higher-yield markets, is being unwound.
In Tokyo, stocks fell 6.4 percent to its lowest close since October 1982. Hong
Kong stocks tumbled 12.7 percent; Shanghai ended down 6.3 percent.
Stocks in Europe were down.
More governments, including
Japan's and Belgium's, are moving to help shore up banks. Finance ministers of the Group of Seven nations expressed concern about the volatility of the yen, and the International Monetary Fund announced rescue plans for Hungary and Ukraine just days after detailing one for
Iceland.
Investors may be focused this week on what governments do and on economic data coming out: The Federal Reserve is expected to cut its benchmark interest rate on Wednesday, and the first estimate of the U.S. economy's gross domestic product is released on
Thursday. But there is also a pressure to sell in this market that will not be eased by any good news on the macroeconomic front.
The Financial Times' Alphaville blog points to a bearish note from Nomura Securities this morning:
"With markets behaving the way they are, rationalizing such extreme movements with economic or corporate fundamentals is virtually impossible. Risky financial assets have effectively ceased to be discounters of likely future economic events."
Last week, the Standard & Poor's 500-stock index fell 6.8 percent, while the Nasdaq composite index lost 9.3 percent.
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