Goldman Can’t Keep Stock Market from Sliding
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Yesterday saw a rather enthusiastic rally on the U.S. stock market. However, the excitement doesn’t seem to be holding over today. Even news of Goldman Sachs’ large profits can’t change the mood on Wall Street today, although the bulls are making an attempt to drive stocks back into the black. It’s been an interesting session so far, with the Dow swinging between gains and losses. The trouble the bulls seem to be having has to do with concerns about the future. MarketWatch reports on the worries that some Wall Street investors with regard to the future of the economy — and how that might affect the banks:
Despite that welcome news, some market veterans remained on the defensive Tuesday morning. Worries about whether the banks’ good fortunes can continue or whether the recent market correction was sufficient to shake out the excesses of the spring’s rally were still afoot, keeping major indexes in check.
Referring to a scenario that is widely expected to come true in the next few months, strategist Bill King, of M. Ramsey King Securities in Burr Ridge, Ill., said: “The banks just aren’t set up to handle a double-digit unemployment rate. Once we see that in the economy, it causes a whole bunch of problems for them,” including potential for renewed wave of loan defaults.
Even though it appears as though the banks may be on the verge of getting back on their feet, if people can’t meet their obligations, it is likely that they will add to the mounting losses banks have experienced since the subprime mortgage collapse and subsequent financial crisis. There is quite a ways to go before banks, the stock market and the economy are out of the woods.
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.
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