Recovery faltering as stock indexes slump

Friday, July 16, 2010
Stocks slumped on Friday.
- By John March
Impressive corporate profits weren't enough to jolt the bulls into action this week, as stock indexes described a perfect parabola from Monday to Friday. Despite gains of 2 to 3 percent at midweek, all three major indexes had collapsed back to their starting points by noon on Friday.

That's bad news for those hoping that surging stock values alone could drive the economy out of recession. It's corporate earnings season, and the news has generally been mixed. JPMorgan Chase, chip manufacturer Intel and aluminum producer Alcoa all posted better-than-expected results, but other companies didn't fare as well.

General Electric, Citigroup and Bank of America all missed estimates, while Goldman Sachs settled the suit brought against it by the SEC for $550 million.

That just boosted the investment bank's shares, though: As it turns out, the fine is equal to just 14 days of Goldman's first-quarter earnings.

The market signals point to sustained weakness in stocks, which is probably good news for hard assets like physical gold. The price of dealer gold has jumped almost 8.5 percent since the beginning of the year, and at one point it was up almost 15 percent.

By contrast, the S&P 500 never got past 10 percent gains in 2010, and it's currently down almost 4 percent.ADNFCR-2970-ID-19895170-ADNFCR