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Closing Bell: 08.16.07

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Are you people kidding us? Forget roller-coasters. This was like a wave pool, with ebbs and rally waves, with a crescendo that made it look as if the major indexes would all close up for the day after hitting deep, deep lows. There were cheers on the floor of the NYSE as the Dow momentarily pushed into positive territory, only to sink again as the final trades were tallied. In the end the Dow Jones Industrial average and the NASDAQ Composite Index closed slightly to the downside, while the S&P made it back into positive territory.
Oh. What? You want numbers? The Dow fell 15.69 points to 12845.78. It’s low was somewhere around 340 points from the open. The Nasdaq Composite Index dropped 7.76 to 2451.07. The S&P 500 closed up 4.55 for 1411.25.
“Too perfect” is how some are describing the rebound from a point when all three major indexes hit lows that were about 10% from their July highs earlier in the day. Was this the much talked about 10% correction? The symmetry has some suspecting that we may have more days in the volatility wave pool.
Keep in mind that despite the rally more stocks on New York Stock Exchange fell than rose. 1,313 stocks rose while 2,104 dropped. Among the those with gains was a broad range of financial stocks. Much of the rally in financial stocks is being attributed to short covering in advance of options-expiration day tomorrow. Two of the most abused—and widely shorted—financial stocks in recent days and weeks, Bear Stearns and Lehman Brothers, finished up. Bear added 13%. Lehman added 6.7%.
The markets were awash with rumors today. Tech companies, mortgage companies and hedge funds got the worst of the rumors of imminent doom. Many traders reacted to the unofficial word that the Federal Reserve was considering all of its options by concluding that an emergency rate cut was on its way.There were widespread whispers that another big multi-strategy firm was liquidating equity positions early in the day.
Is it the weekend yet? Our fingers are getting pruney and we're ready to get out of the wave pool now.
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