By Maxine Shapiro, KERA 90.1 commentator
Dallas, TX – Most of the time, the market concentrates on reacting to one news item or another. Today, all the news appears to be influencing its direction, and for the most part, it's not good. I'm Maxine Shapiro with KERA Marketplace Middays.
Last week, the escalation of violence in the Middle East began to weigh on the market. No one seemed to be exempt from the feeling of hopelessness. There was no tangible impact, until yesterday when Iraq announced that they would halt oil exports for 30 days starting today - or until Israel withdraws from the Palestinian territories. Though oil prices rallied on this action, this could also mean inflation, which nobody wants to see just yet. Besides inflation, higher prices at the gas station could have some bearing on consumer confidence. We do not like to spend more money at the gas station.
Now as discussed on Friday, the class-action lawsuit filed by Enron ex-employees and investors (to recoup the money they lost in the bankruptcy) has added some very prestigious names to the list of plaintiffs; nine banks and financial institutions - nine very big and reputable banks and financial institutions. The good news: in this country, one is innocent until proven guilty. Though not always the case when it comes to perception, Wall Street analysts are giving these banks the benefit of the doubt. See, with the economy growing at a slower pace, the Fed will not be forced to raise interest rates. And that, according to analysts today, would be bullish for these financial institutions.
And as earning season opens, IBM came out with a huge warning that their profits and revenues would be lower than analysts expected. IBM opened $10 lower. For every dollar, IBM is down, the Dow Jones average is down by about seven points, and for the Dow, 7 times 10 is quite a move. And this is just Monday. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 P.M.