| January's Plunge Has Been Dizzying; Now, the Good News
Forget the "January effect," the traditional boost stocks got from new money flowing into the market after the new year. The few weeks of trading in 2008 have turned out to be among the worst ever for the stock market. And Monday's plummet in the global markets and yesterday's scary opening hours in the U.S. would seem to test the theory. But the day ended with U.S. stocks showing just modest declines. To be honest, I've never thought the January effect made much sense. Supposedly, stock prices are depressed by tax-loss selling before Dec. 31, and then bargain hunters rush in after the new year. But what about years in which there were few losses, and hence not much tax-loss selling? And why did stocks with big gains rise as much as those subject to tax-loss selling? Perhaps 2008 will also test the theory that stocks rise in election years.
EBay wavers after 4Q report
Shares of online auctioneer eBay Inc. rose Wednesday ahead of its fourth-quarter report, as a Stifel Nicolaus & Co. analyst called the stock his "best short-term idea" -- but retreated in after-hours trading after the report's release. EBay shares rose $1.81, 6.7 percent, to close at $28.94 in advance of the earnings report and before Chief Executive Meg Whitman announced she would soon step down. In extended trading, the stock initially rose but then retreated to $27.50. The stock hit a 52-week low of $26.02 on Tuesday, as fears of a recession hurt stocks around the globe, despite a decision by the U.S. Federal Reserve to cut the federal funds rate by three-quarters of a percentage point to 3.5 percent. In a client note Wednesday, Stifel Nicolaus analyst Scott Devitt said that though eBay is losing e-commerce market share, its competitive position is stabilizing in core areas including liquidation inventory, collectibles and difficult-to-find items, he said.
From East to West, panic grips the world’s investors
After the carnage on global markets on Black Monday, Japan and Australia were the first powerhouse economies to see the dawn of Tuesday morning. While American markets had taken Monday off for Martin Luther King Day, the panic gripping global markets had continued to wreak havoc.
Yesterday, as US traders slept, the bloody trading began anew on the other side of the world. By midnight GMT Australia’s markets had been open an hour. Investors’ rush for the door crashed the website of the country’s leading online share broker, CommSec, as the market started an immediate downward spiral. The stock market’s fall of nearly 3 per cent on Monday looked timid as it raced towards its biggest one-day slide in 20 years. Hans Kunnen, the head of investment markets research for Colonial First State, said: "Judging by the mood of the market today, the bears are certainly winning."
However, what the Asian markets did not know, as they started their downward spiral, was that in America the members of the Federal Reserve were calling each other.
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