Markets Need More than Speeches

Tags: $dji, spx
9 Jan 1:48am
Posted by ZacksResearch
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The pullback in the Dow Jones Industrial Average ($DJI) and the S&P 500 (SPX) today shows that the markets need more than just speeches to move higher. Rather, investors require reasons to believe that a recovery will actually occur sooner than later.

This morning, President-elect Barack Obama prodded Congress, once again, to quickly approve a massive stimulus package. However, Congress has a tendency to move at its own speed. Furthermore, even with a single party in control, there is no guarantee what the actual size of the package will be. Then there is the inevitable lag that will occur between passage and implementation.

Though Obama was voted in on a platform of change, contrary to rumors he is not the Messiah. He cannot make legislation move quickly through the Capitol and he certainly cannot get state legislatures to act in timely manner. Therefore, even if a $700-$800 billion package is passed, the timing of its impact remains uncertain.

For the stocks to truly stage a rebound, investors will need a sense of when the stimulus will be actually be implemented. Right now, no one knows the answer.




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