The last few weeks the stock market has been on a giggly high. The Dow was back up from its early March lows, and financial stocks, buoyed by positive earnings from Citigroup and JPMorgan, were inching their way toward more normative prices. But through it all, economists were warning that the high wouldn’t last, and it seems they were right. Today, the Dow fell 289 points, back to 7,841.73; the S&P fell 4.2 percent, and the Nasdaq 3.8. Financial stocks were down all over, even at Bank of America, despite the fact that this very day Ken “I told you I was right” Lewis declared a first-quarter profit of $4.2 billion, double the previous year. The reason? Mistrust, basically. Investors simply don’t believe that these institutions are out of the woods just yet, and the more they learn about the accounting practices the institutions are using to help themselves declare profits, the less confident they feel. “I think these type of markets scare people,” one broker told the Times. “When you get a day like this with a lot of negative talk, it gives them reason to pause and take a look and really see what’s going on in the economy.” Uh-oh. And you know what happens when people look around? They notice things. All we’re saying is, watch your back, Vitaminwater.
Bank Fears Sink Stocks [WSJ]