8 reasons the market isn't worse
8 reasons the market isn't worse

Stocks should be crushed by global turmoil, Jim Cramer says. Instead, they're doing fine.

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The agency is under the microscope after downgrading the US credit rating. After its spotty track record, should its opinions matter?

By Kim Peterson Aug 10, 2011 2:48PM
It's been nearly a week since Standard & Poor's downgraded the U.S. credit rating, and the agency is still receiving plenty of criticism.

Is it warranted? Should we trust S&P, which, along with other ratings agencies, maintained Enron's top AAA credit rating even as the company spiraled toward bankruptcy? By S&P's standards, Enron was more likely to pay its debts than the U.S. This is the same S&P that slapped a perfect rating on those mortgage securities backed by high-risk loans that helped plunge the U.S. into financial crisis.

Politicians and regulators have jumped all over S&P for its actions, saying the agency's track record clearly shows it's out of its league when it comes to understanding debt.  

Hundreds of new locations are planned worldwide. Even amid global economic woes, the strategy makes sense for this reinvented company.

By Kim Peterson Aug 10, 2011 2:16PM
There used to be some intersections in this country where you could stand and see two, or even three, Starbucks (SBUX) locations nearby.

That was before Starbucks saw its real-estate bubble crash when the U.S. economy turned. The company closed 900 stores, effectively tossing its ambitious expansion plans in the garbage.

But old habits die hard. Starbucks is revving up again and will open 300 new locations this year and next, MSNBC reports. But wait, aren't we on the verge of another recession? Oh, stop worrying and go get a Caramel Macchiato. 

Despite the market turmoil, these global utility stocks are still trending higher and paying sizable dividends.

By MoneyShow.com Aug 10, 2011 11:21AM
By Tom Aspray, MoneyShow.com

The stock market action on Monday and Tuesday suggests that a panic low may now be in place and that this week’s lows could hold for some time. Even if this is the case, some backing and filling with further wide swings is likely over the next few weeks.

In this environment, and with the prospects of low rates lasting until 2013, I continue to favor high-yielding utility and drug stocks. One of these global utility picks yields over 8%, but let’s first look at the recent market action.

The Fed’s statement on Tuesday afternoon added to what was already one of the all-time most volatile days in terms of swings in the S&P futures, as there were five 40-plus-point swings in just one day of trading.

The closing Advance/Decline (A/D) numbers were impressive with 3664 advances versus just 512 declining issues. This caused a sharp reversal in the McClellan Oscillators, which rose from very oversold levels at -440 to just -65.

The A/D lines have turned up but now need to start new uptrends to confirm a significant market low. The S&P 500 could rally further to the 1200-1220 area before we get a decent setback.
 

The US is in really bad shape, though we know the extent of it. Europe is not as bad as people think.

By Jim Cramer Aug 10, 2011 9:02AM

jim cramerthe streetHow much damage was done by the budget disaster in our country? How much damage could a collapse of the euro and the banks in the euro states do to the world's economies?

 

Those two albatrosses could reverse any rally, stop any bull in its tracks. We are all trying to figure out how much impact these have had and could have. Does an ineffectual president and a fractious congress equal a 1% decline in GDP from levels that were low already? If Italy goes bust, does that mean we go into a second recession?

 

You have to visualize these crimes against the economy on a calm day, because on a down day they both seem unfathomable and on an up day they can seem trivial.

 

I think the dysfunction in the U.S. was a huge wake-up call to the world that, right now, we are politically bankrupt. The Standard & Poor's downgrade crystallized what most people are unwilling to say, which is that until our president loses in the election, which I don't think he will, or the Tea Party obstructionist anarchists fall by the wayside, we can't really have an economic recovery of any sort in this country.

 

Stocks surge after the Fed soothes raw nerves with the promise of 2 more years of easy money. But be careful, as rapid turns mean danger.

By Anthony Mirhaydari Aug 9, 2011 5:18PM

What a difference a day makes. Monday, it was all doom and despair as traders reacted to the weekend news that America had lost its AAA credit rating and was docked to AA+. Fear and panic were at work.

 

Stocks melted in response, continuing one of the worst runs in history. By one measure, Monday's sell-off was the worst seen in more than 70 years. By another measure, the overall market had reached its most oversold level since the 1930s. In a blog post after the close, I wrote that we were nearing a turnaround point.

 

Tuesday, we got it. Equities launched higher, led by beleaguered bank stocks, after the Federal Reserve acknowledged recent economic weakness and vowed to keep the firehouse of easy money going until 2013. The question now is: Can the positive momentum continue?

 

Rising food prices pushed overall inflation up in July, but the country could soon see a peak.

By Jim J. Jubak Aug 9, 2011 5:00PM
Jim JubakChina's rate of inflation increased to an annual 6.5% in July from 6.4% in June. That is certain. What it means for the financial markets and China's economy is all speculation at this point.

Going into the numbers, there was optimism that July would show that inflation had peaked. Some economists were even looking for confirmation through a drop in July’s reading, say to 6.3%. They didn’t get that.

But the July number may still be good news. Economists have been projecting that inflation would peak near 6.5%, sometime around the middle of the year.

And July’s number certainly doesn’t rule out that possibility. It merely says that we’ll have to wait for August data to know what the trend looks like.
 

Exxon has held that title since 2005, but Apple surged ahead for much of the day Tuesday.

By Kim Peterson Aug 9, 2011 3:18PM
Updated 4:20 p.m. ET

Which is the world's most valuable company: Apple (AAPL) or Exxon Mobil (XOM)?

Until Tuesday, the answer had been Exxon. We're talking about a company that set a record in 2008 for the highest quarterly earnings of any company ever. But Apple shares have been on an unbelievable march since 2009, and Apple passed Exxon to become the most valuable company.

For much of the afternoon, anyway. But Exxon came back at the last minute.

Apple shares closed up nearly 6% Tuesday to $374.01, giving the company a market cap of $346.74 billion. Exxon shares rose a little more than 2% to close at $71.64, making its market cap $348.32 billion. 

The world's biggest ETF could soon be SPDR Gold Shares, which took in $1.3 billion on Monday alone. Some analysts see the metal hitting $2,500 by year's end.

By Kim Peterson Aug 9, 2011 2:13PM
Updated 5 p.m. ET

Investors can't get enough of gold this week.

Gold (-GC) futures hit a record Tuesday at $1,778 as the chaos continued in global markets, and analysts said the precious metal may be headed even higher. But gold settled back to close at $1,740.50 as investors showed renewed interest in the stock market.

The new push for gold means that the world's biggest exchange-traded fund could soon be the SPDR Gold Shares (GLD), which took in $1.3 billion in new assets in just one day Monday.
 
Tags: etfgold

7 quick tips to keep you sane and solvent.

By Motley Fool Pick of the Day Aug 9, 2011 1:47PM

By Joe Magyer

 

Investing through recessions is nerve-wracking. Here are seven quick tips:

  1. Write down your strategy: Take 10 minutes to write down your investing strategy and why you hold each of your stocks, bonds, CD's and mutual funds. Use that document as your pillar of strength if markets go bonkers.
  2. Diversify: There's a reason financial advisers pound the table on diversification: It works. Lower your downside and sleep easier by investing across a range of asset classes, styles (value, growth, etc.), industries (consumer staples, energy, etc.) and countries (U.S., Freedonia, etc.). If you're new to stocks, here's a quick primer on how to get diversified.
 

Funds tracking gold, the Swiss franc and some of the world’s largest, most stable companies can offer shelter.

By TheStreet Staff Aug 9, 2011 11:51AM

By Don Dion, TheStreet

 

Individuals from the blogosphere and mainstream financial media spent last weekend obsessing over Standard & Poor's decision to downgrade the U.S. credit rating to AA+ from AAA. Because the event was the first of its kind, it's understandable that fears are widespread as investors, market commentators and analysts scramble to find meaning and prepare for the road ahead.

 

While it may be tempting to flee the markets, taking brash actions is not a route I would suggest. On the contrary, long-term-minded ETF investors will need to be patient. Those looking to ease their nerves should keep their eyes on defensive asset classes. In the event of a prolonged shakeup, these corners of the market will provide a welcome buffer against upheaval.

 

If you're panicked, your portfolio might have been wrong to begin with. You need a plan for bad times as well as good. Here's what to do -- and when to worry.

By TheStreet Staff Aug 9, 2011 11:04AM

By Seth Fiegerman, MainStreet

 

The U.S. had its credit rating downgraded from AAA to AA+ late Friday by Standard & Poor's for the first time in history, but despite the concern among consumers and investors, financial planners argue the downgrade isn't reason enough to make any drastic changes to one's portfolio.

 

"If the portfolio you own is properly diversified and if your long-term goals haven't changed, then you should not be making any changes because of this," says Ric Edelman, a prominent financial adviser and the founder of Edelman Financial Services. "Our concern is that a great many consumers don't have a diversified portfolio."

 

History proves that the current meltdown is not a first. Investors who resist panic selling now should be rewarded later.

By MoneyShow.com Aug 9, 2011 10:35AM
By Tom Aspray, MoneyShow.com

The relentless nature of the stock market decline over the past 12 days has been astounding. The Dow has dropped 15%. Given the expansion of the derivatives market, the volatility is clearly higher now than it has been in past market declines.

A great example of this is seen in the action since Monday's close in the S&P 500 futures. The September S&P futures closed Monday at 1,111.25, with a low for the day of 1109.50. Overnight, the futures dropped as low as 1,077 -- more than 40 points below Monday's close -- and then reached a high of 1,148, which was 37 points above Monday's close.

Monday's drop was the largest since Dec. 1, 2008, when the Dow dropped 680 points, although the market regained that loss just five days later. Clearly, this decline must be looked at in a different light.

The selling in some of the individual stocks has been even more severe, as Bank of America (BAC) was down 20% on Monday alone. The relative performance, or RS analysis, for the big banks has been negative for most of the year, and in early July (see 3 Big Banks That Aren't Cheap Enough), this analysis suggested they were still vulnerable.

So is this market decline the worst, and if not, can past market declines help prepare us for what may happen next? Let's take a look at some interesting historical examples.
 

Unless we have a severe recession, many of the stocks you see in free fall will be higher a year from now.

By Jim Cramer Aug 9, 2011 8:03AM

the streetthe streetIn the past 24 hours in stock futures we have had a 2% rally and a 2% decline all within the time it takes to drink a can of Coca-Cola.

 

The speed is breathtaking. No human can keep up.

 

While we were able to rally, the rally seemed like a terrific opportunity to sell if only because you can buy it back at the conclusion of the last gulp -- if you would like to, that is.

 

Markets all seem to want to be down 20% for the year, and anything less seems, at this time, to be a gift.


As our Dow is down only 6% and is about the best-performing market in the world, you can figure that if it keeps pace with the others, it is a straight shot to 9,200. That's no support for anything, but it is a reasonable target if you think we are part of this wave flowing over the world.

 

My disaster target has been about 8,500, so 9,200 could be reasonable if we just keep pace -- and there is no particular reason that should not happen. So many are pinning their hopes on the Fed that it is a little unsettling. Last I looked, the Fed doesn't set stock prices.

 

Don't follow the herd, because nothing has fundamentally changed about our economy or the market.

By InvestorPlace Aug 9, 2011 7:16AM

By Charles Lewis Sizemore, InvestorPlace.com


After the stock market tanked Monday, thanks in part to Standard & Poor's historic downgrade of the United States' credit rating, investors are left with one enormous question on their lips: What do we do now?


Well, I have three tips for you, and they may not be popular. That's because I advise running against the herd by selling gold, avoiding Treasurys and hiding out in blue-chip stocks.

 

After one of the worst sell-offs in history, a look at what's next.

By Anthony Mirhaydari Aug 8, 2011 5:06PM

Wall Street traders returned to work Monday in the mood to sell after mulling the consequences of America's first-ever credit downgrade last week. Main Street investors, with a mix of fear, anger and uncertainty, piled on, too.

 

The result was one of the deepest sell-offs in market history and a continuation of a now 3-week-old wipe-out for stocks. Out of the 3,085 issues that trade on the New York Stock Exchange, just 42 managed to move higher. That's less than 1.4%. And that's the worst result in more than 70 years.

 

Over the past 11 trading days, the Dow Jones Industrial Average has lost nearly 1,900 points, falling to levels not seen since September 2010. That's a drop of nearly 15% -- enough to nearly wipe out the gains from the Federal Reserve's most recent $600 billion stimulus. This is a drop on par with the 2008 financial crisis, the 1987 Black Monday crash and the various Great Depression meltdowns. 

 

For beleaguered investors, the question is: When does this nightmare end?

 

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[BRIEFING.COM] The stock market finished the Tuesday session on an upbeat note with small caps pacing the rally. The Russell 2000 advanced 0.8%, while the S&P 500 added 0.5% with eight sectors ending in the green.

Although geopolitical concerns factored into the modest retreat on Monday, the worries were cast aside today after separatist forces in eastern Ukraine handed over black boxes from MH17 to Malaysian authorities and Secretary of State John Kerry began working on brokering a ... More


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