Stocks Open 2008 With A Beating
Primarily due to recession fears, stocks sold off in the first day of trading this year. A worse than expected manufacturing report sparked the selloff. Energy stocks did well due to oil reaching $100/barrel at one point during trading today.
The coming year seems like it will be filled with volatility, just as the end of 2007 was. There are a lot of factors that can lead to this. The first is the continued credit crunch. That story doesn’t seem to be over with, and only time will tell how much housing goes down. Another factor related to this is what the Fed does. Many hope the Fed will cut rates considerably in 2008, believing that the Fed funds rate is still too high. I am in this camp as well. Hopefully, the Fed will cut sooner instead of later, so we can avoid a recession.
Other interesting factors include the 2008 elections. Both nominations, especially the Republican nomination, seems up for grabs. Who it seems will likely control the White House and Congress will likely affect returns considerably towards the end of the year.
