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January 19, 2005
Iraq Election Looming
I've been trolling news sites since the market closed, trying to figure out why stocks had such a weak finish today. The Dow closed down 89 points, with most of the losses coming in the last hour-and-a-half of trading.
Some commentators point to disappointing earnings news today, but I don't think that's it. Is it really such a surprise that airlines posted weak results? And does it matter to the market overall if JP Morgan Chase and Advanced Micro Devices disappointed today when yesterday we saw so much strength in tech and financials?
Other commentators pointed to inflation -- also a misdiagnosis if you ask me. Consumer prices actually fell a bit in December, even if the rate of inflation in the past 12 months has accelerated. In fact, the slew of economic reports out today were strong on the whole. Weekly jobless claims dropped sharply -- a good sign for the labor market. And the housing market remains remarkably robust.
So what sparked the sell-off? One trader pointed to worries ahead of the January 30 election in Iraq. That got me to look at my calendar. It's just 10 days away. Today brought a wave of car bombings in Baghdad that killed at least 12 people -- more bad news.
I'm not sure if the run-up to the Iraq election is what spooked investors today, but my guess is that mayhem in the region will trigger more end-of-day jitters in the days to come. I hope I'm wrong.
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