Friday, December 28, 2007

Did Bhutto Assassination Affect the Markets?

I know it's been popular the last day or so to point to the Bhutto killing and then to the stock market and try to draw connections. Believe, me, the stock market drop has much more to do with market fundamentals and very little to do with politics around the world.

U.S. stocks fall, pressured by downbeat home sales
NEW YORK (MarketWatch) -- Stocks declined on Friday, giving up their earlier gains, after a disappointing report on new home sales for November rekindled concerns about the U.S. economy and the housing crisis. The DOW fell 55 points, or 0.4%, to 13,303. Earlier, the Dow hit an intraday high of 13,451.38.

The Dow is on track for a yearly gain of 7%, the S&P for a gain of 4% and the Nasdaq for a rise of 10.7%.

The new home sales report was "the turning point and pushed it [the market] lower," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank. "The number was quite a bit weaker than expected."

So the market drop is due to the underlying fundamentals, not to the tragic death of Bhutto.

Don't believe anybody who says anything else.

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