The major indexes dropped like a rock in the early going yesterday, fueled by continued worries that Ireland’s debt problems might spread to other European countries. The dollar rallied while interest rates headed lower.
The stock market slumped to its lowest level since October within the first hour of trading with the Dow breaking below its psychologically important 11,000 level. A big comeback pushed the indexes almost to a breakeven point without any particular news being accountable for the rally.
Short covering could have played a role along with the dollar slipping back later on in the session. Today’s economic menu includes the Case-Shiller home price index, Chicago PM index and Consumer Confidence, all of which can influence market direction.
The outcome of these three data points could very well determine if the major indexes close the month of November with slight gains, or if they end up slipping into the negative column.