U.S. Stocks Retreat Following Rally Yesterday

[chill_wind]

U.S. Stocks Retreat Following Rally as Citigroup, Disney Drop
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By Lynn Thomasson

March 24 (Bloomberg) -- U.S. stocks declined as the nation’s top two economic officials called for stronger regulation of financial firms and Nobel Prize-winning economist Paul Krugman said the government will have to seize major banks.

Citigroup Inc. and Bank of America Corp. retreated after the shares jumped more than 19 percent yesterday on the Treasury’s plan to purge toxic assets from banks. ConocoPhillips and Baker Hughes Inc., the third-largest oilfield services provider, fell more than 2 percent. Walt Disney Co. slumped 2.5 percent following a downgrade by Goldman Sachs Group Inc. on concern the stock is too expensive.

The Standard & Poor’s 500 Index lost 1 percent to 814.44 at 3:39 p.m. in New York, a day after its biggest rally in five months. The Dow Jones Industrial Average slid 52.97 points, or 0.7 percent, to 7,722.89 and the Russell 2000 Index decreased 2.6 percent. Three stocks fell for each that rose on the New York Stock Exchange.

“When you’re buying equities, you’re buying a stream of earnings and current earnings are in freefall,” said Douglas Cliggott, the Greenwich, Connecticut-based manager of the $81 million Dover Long/Short Sector Fund, which beat 97 percent of its peers last year. “We haven’t hit bottom yet.”

New Powers

The S&P 500 jumped 7.1 percent yesterday, extending its rebound from a 12-year low on March 9 to 22 percent, as investors speculated the White House plan to finance purchases of toxic assets will spur growth. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner, testifying to Congress today, called for new powers to take over and dismantle failing financial firms after the government’s troubled rescue of American International Group Inc.

more: http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=amZydeVydzfo

[Sultana]

1. Ha, I knew it wouldn't last

:-(

[Warpy]

5. It held on more than I thought it would

but I fully expect the long term trend to be down.

[Thrill]

2. Have any thing to do with Geitner requested new power to takeover?

You betcha!!

[backscatter712]

3. This is normal.

After a big rally day, traders go "WOOHOO! Prices are high! Let's make some cash!" and do some selling. Bull markets are full of these days - stock market goes great for a few days, then traders cash in their gains and the market falls a bit, then goes back to gaining.

It'll take a few weeks to figure out whether the latest stock market rally will turn into an actual bull market, or whether it's a dead cat bounce.

[louis-t]

4. Dow down 53. Big deal.

There will always be some profit taking after a big gain. What the markets need is stability. Investors got used to day trading again because of uncertainty and had to deal with wild swings, 600-700 points in one day. Remember when 100 point move in one day was earth-shattering?

[mnhtnbb]

6. I was buying today. Bond funds and a medical equipment maker

that does NOT have earnings in a freefall.

Time will tell.