The bobbing and weaving that made up most of the session resulted in a 21-point gain on the Dow, though the broader S&P 500 was down a bit. There will be all kinds of explanations for the better-than-expected session - the apparent resolution of the Bear catastrophe and the Fed's pending interest rate cuts among them. I wouldn't put much stock in any of it, but perhaps it's worth noting that the interest rate spread between debt backed by mortgage-buyer Fannie Mae and Treasuries narrowed slightly. That could point to a slight boost in confidence. Then again, it could be a one-day blip. “We’ve entered an environment where it’s not just the banks’ write-downs anymore but a complete lack of confidence,” James Nixon, an economist at Société Générale in London, told the NYT. David Gaffen at WSJ's Marketbeat has a slightly more encouraging take.
After all that, the Dow industrials put together a rally, and the action in the major averages does not suggest what seemed to be a harbinger of impending doom. It wasn’t a good day, per se — Bear Stearns has been taken out and shot, of course, and numerous other financial firms were hammered by short-sellers, continuing the modern-day run on the banks witnessed in Bear last week. However, the rest of the market wasn’t a disaster. There’s an emerging line of thought that this is perhaps the time to buy stocks (though probably not banking stocks). “We’re not seeing a lot of stocks at 50-day lows or yearly lows like we did in January, so many groups of stocks are in a phase of healing,” notes Steve Goldman, strategist at Weeden. For that matter, as interest rates continue to decline (and the two-year note is traded at 1.38% of late), bonds become very unattractive when compared to stocks.