The Worst is Not Over Yet but We Can Survive, only if …
Wall Street was behaving as if the worst was over which saw investors snapping stocks in anticipation of a reverse to the bearish market. Everybody was trying to prove that they managed to buy at the lowest. It sure feels good if your prediction was right.
After all how many can beat Warren Buffett in the game of “I bought at the lowest”, never mind that the Oracle couldn’t do so himself? But a surprisingly weak retail sales report punctured investors' optimism about the economy causing Dow Jones to lose almost 140-points. Financial stocks took the beating after Goldman Sachs Group Inc. announced strong profits but said it would raise $5 billion (huh?) to repay government bailout money.
The unexpected 1.1 slump in retail sales (the biggest fall in three months) in March was far worse than the increase of 0.3 percent that analysts polled by Thomson Reuters. So, if you think the worst is over think again because we’re not out of the woods yet. With Americans still losing jobs by the thousands, a major fear is that people will cut back even further on their spending and that could plunge the powerful economy into a sharper tailspin. Yahoo Inc. is gearing up for its third round of mass layoffs in 14 months. Intel Corp.’s strong first-quarter earnings result ($647 million) that easily beats Thomson Reuters estimate of 3 cents per share plus its proclamation that slumping personal computer sales have "bottomed out" failed to excite investors. Reason – Intel wouldn’t give detailed revenue forecast because it's still “too hard” to accurately predict results in this environment.
