Weekly Market Review ~ Friday, August 26, 2011
Stocks experienced another volatile ride on Monday before finishing with a modest gain, as investors tried to rally the market from a 4-week, 15% slide. On Tuesday, the Dow soared over 300 points despite a lack of positive economic news. While seemingly paradoxical, the possibility that poor economic news will lead to the easing of monetary policy by the Fed sometimes leads to a “bad news equals good news” investing mentality. Stocks continued up strongly on Wednesday, as gold fell abruptly from its recent high to below the $1800 an ounce mark. The market gave back some of its weekly gains on Thursday with a sizeable loss despite Warren Buffett’s decision to invest $5 billion in Bank of America, as investors are having doubts that Fed Chair Bernanke will enact quantitative easing in the near future. Another wild ride on Friday eventually led to big gains on Friday as Bernanke gave encouraging words for the economy while not announcing any additional stimulus plans.
Stocks broke a horrendous 4-week slide with a strong bounce back this week.
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