Wednesday, November 2, 2011

Stock Market Recap

On Wednesday, the Dow gained 178.08 points, after losing 573 points over the two previous days over the closure of MF Global and situation in Greece. MF Global, a global financial derivatives broker, filed for Chapter 11 Bankruptcy after making a massive leveraged bet on European debt. In Greece, Prime Minister George Papandreou put a referendum over a debt bailout for the nation, which took months for European countries to broker. If voters reject the referendum, a default could result from Greek debt, leading to massive losses for banks holding Greek bonds. Papandreou is scheduled to meet with G20 leaders on Thursday and Friday.

Meanwhile in the United States, private hiring increased by 110,000 in October, surpassing economic expectations. This report comes in days after the news that consumer spending increased by 0.6% in September, while income only increased by 0.1%. These signs of improved confidence were encouraging and aim to allay fears that the United States is on the verge of another recession. Most of the jobs added in October were from the service sector, and investors hope for similarly optimistic news for Friday's broader employment report.

Despite Monday's drop, Dow posted 9.6% gain in October, the best one-month performance since 2002. However, the significant drop over Monday and Tuesday still illustrates the vulnerability and volatility of the market given the circumstances in Europe.

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