Today proved a popular adage on Wall Street...institutions bid up stock prices in the morning on hopes of passage of the rescue/bail-out bill (the Dow was up 250 points)...then stocks were sold off after news of the bill's passage came out (Dow closed down 150 points). Reality is setting in, traders realizing this crisis won't be resolved with the passage of the bill.
The next phase for the market? Corporate earnings start coming out over the next few weeks. Currently, the market is discounting an annualized trend-line of $70/share earnings for the S&P 500 (as compared to $90+ during the peak in 2007). There is a risk to stock prices if earnings (and, most importantly, forward looking expectations) come in at a lower run rate.
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