Valuations Boost Stock Market: Dow Ends 889 Points Higher
This whole month has been little more than a bloodbath on the stock market. October 2008 is set to be one of the worst months in the history of the stock market, even with today’s remarkable rally (the Dow climbed 889 points). But what was the driving force behind today’s huge rally?
Finally, investors are being lured by cheap valuations. Great bargains are out there, waiting to be snapped up. And today plenty of investors decided that the market was the place to be. Even financial stocks saw gains today as investors decided that the government is likely to keep the whole thing from collapsing, and now is the time to get in while the getting is cheap.
But that doesn’t mean that stock market troubles are over.
Volatility issues on the stock market
Even though it may seem as though this is a migration toward solid gains by the stock market, something very similar (and even bigger single-day point gain by the Dow) happened just a couple of weeks ago. The next day saw a huge drop. Indeed, the stock market has been so volatile that sizable rallies this month have sometimes reversed themselves in the course of a day. And today’s huge rally came in the final hour of the trading session.
CNN Money reports on how volatility needs to go before the stock market can truly recover:
“When you look at this in terms of valuation, volatility and investor sentiment, everything portends that a bottom has been reached or is near,” said Matt King, chief investment officer at Bell Investment Advisors.
However, he said that a more extended rally would be dependent on seeing more of the hour-by-hour volatility washed out of the market.
So, even though things look promising, we’ll have to see what happens overnight in Asia and Europe — and see how things look here in the U.S. come morning.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
October 29th, 2008 at 11:15 am
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