Find the latest episode of "This Is Uncomfortable" here. Listen

Is Wachovia news start of a wild ride?

Bob Moon Apr 14, 2008
HTML EMBED:
COPY

Is Wachovia news start of a wild ride?

Bob Moon Apr 14, 2008
HTML EMBED:
COPY

TEXT OF STORY

KAI RYSSDAL: Grab a good firm hold of that safety bar. Make sure it’s low and snug across your hips, just like it’s supposed to be, because we could be in for a doozy. We’re going to hear from JP Morgan, Merrill Lynch, Citigroup and others this week about first quarter profits. It’s entirely possible it’s going to be a nice gentle ride, but we hit a big bump early today when Wachovia posted an unexpected first quarter loss of $350 million. Most of that was the result of the bank’s ill-timed move into the mortgage business. All the same, investors are left to wait and wonder what’s coming up around the next curve.

Our senior business correspondent Bob Moon reports.


BOB MOON: If you’ve got a stake in the stock market it could be well worth your time to pay close attention to how things play out in the days ahead. The way that Wall Street reacts to this week’s profit reports could be just as important as the numbers themselves. It may signal whether the damage from the economic downturn, the mortgage mess and the credit crisis has now been “priced in” to share values, or whether there’s still more bloodletting ahead. Ted Weisberg is a stockbroker at Seaport Securities.

TED WEISBERG: Have the stocks priced in the news? Is there more bad news out there than we have basically accounted for? And, will we get the kind of clarification that will help investors make a decision based on today’s news, for tomorrow?

Today’s bad news from Wachovia did drag other financial stocks down, but the bottom didn’t fall out of the overall market, and Weisberg is hopeful that’s a good sign.

WEISBERG: You know, it’s sort of like kicking a dead horse. I mean after a while, you just don’t get a reaction. That point comes for an individual stock when a stock begins to ignore the bad news of the day.

At Jeffries and Company, chief market analyst Art Hogan is also sensing that even the bad news might not be having the dramatic effect it still did just a month or two ago.

ART HOGAN: What would have happened to these names three months ago if this news had come out, versus what’s happening now?

Hogan says the stock market is a compass to the future, and he’s optimistic it’s pointing north.

HOGAN: Some time in the fourth quarter, some time in the first half of next year, there will be, you know, a better market out there, a better economy, and I think that’s what we’re focusing on right now.

Stockbroker Ted Weisberg says it’s just a gut feeling, but he points out, that’s what steers the stock market.

I’m Bob Moon for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.