Money & Investing - Banks.com

Image by jpellgen via Flickr

The Dow is back above 10,000 and investors are celebrating today. Indeed, the financial sector has been lifting earnings overall, and Wall Street is responding to the positive news out of the financial sector. Even with hiccups last week over Citi, Bank of America and CIT, for various reasons, the financial sector is still turning in a strong performance. MarketWatch reports on the earnings of S&P 500 companies:

With more than 12% of its companies reporting, third-quarter earnings have beaten forecasts almost 38%. Yet that percentage would stand at just 8.8% without financials, according to Ed Yardeni, chief investment strategist, Yardeni Research Inc. …

In looking to the fourth quarter of 2009, the Dow 30 stocks are now expected to show a 5.3% improvement on average, with non-financial firms tallying a 1.3% increase, Colas said.

“It is no exaggeration to say that the Dow’s recent rally to the 10,000 mark was in large part driven by this shift in expectations,” said Colas.

The news that the financial sector is ready to lead the charge has many feeling more optimistic going forward. Financial companies are the backbone of Wall Street, providing essential services for other companies, and forming the main thrust behind the Dow and the S&P 500.

However, things are still a bit volatile on the stock market. While the Dow is above 10,000, things are still a bit fragile. Indeed, some bad news could result in a major correction in the stock market. A few investors and analysts believe that there will be another major drop before the economic recovery begins in earnest. In any case, with things still somewhat volatile on the stock market, it does take some guts to buy. Although, honestly, right now might be the time to sell some of your weaker stock investments, since a rally is going on. Buying now may be a recipe for disaster if a correction does take place. (Of course, if you are engaged in dollar cost averaging, you stay the course no matter the market.)

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.