Have you ever wondered why a stock rallied after reporting their worst earnings ever? Have you ever seen a stock drop like a rock after reporting blockbuster earnings? I'm sure the answer to both of these questions is a simple, yes. This happens endlessly in the market on a daily basis. By now you are asking why does that happen?
I was thinking recently about the failed Citigroup Wachovia deal. As a Wells Fargo stockholder, I was in favor of the Wachovia deal because of the large deposit base that Wells is picking up. The merger will give Wells Fargo a major presence on the East Coast and should increase earnings in the future. But I can’t help thinking, what would have happened if Citigroup had gotten Wachovia?
The financial press is beating its "depression" drums just a bit harder this afternoon in the wake of Congress' surprise rejection of its bailout legislation and the market's strong drop. However, we remain skeptical that this behemoth bill would indeed be the market's short term salvation.
Bank of America's profit drops 77 percent in first quarter
It looks like earnings are really driving this market over the last few weeks as investors are looking for signs of stability. Last week Google helped drive the markets higher. The week before GE helped to drive the market into the ground. Looks like it is Bank of America's turn.