Stocks Make It Halfway Back From Selloff

For the second straight day, the developments of Japan have set the tone for
U.S. equities, which have responded to both the huge selloff in Japanese stocks,
as well as a continuing influence in the wake of real-time news reports on the
progress in solving the crisis. Those formerly important issues of oil prices
and/or the unrest in the Middle East? Those are apparently so last week. The
uncertainty of what will happen in the world's 10 th -most populated country
is front and center. As if evidence was needed, one only needed to wake up a few
minutes before the open of U.S. trading. Japan's Nikkei Index had just posted
a two-day loss of more than 17% and market futures in this country were pointing
toward a decline in the magnitude of more than 2%. In fact, such a decline was
in the early cards, as the Dow Jones Industrial Average fell nearly 300 points
out of the gate, and the S&P 500 came to within 5 points of its closing level of
2010. Yes, at one point on Tuesday, stocks were up 0.4% for the year. From that
point, however, events started working more in the bulls' favor. First and
foremost, while the news out of Japan – much of which has defied a definitive
version of the current state – was hardly positive, some indications that
things were either improving, or not getting worse, was starting to trickle in.
Whether that's true, investors at least could begin to consider a floor to the
damage and recovery costs and timeline, something that was impossible on Monday,
when nuclear meltdown seemed a stronger possibility than it did by Tuesday's
close. And then there was the help from oil prices, which had been declining in
recent days, but have rapidly fallen to around $97 a barrel on expected lower
demand in Japan. Regardless of the reason, the return of double-digit oil prices
has its benefits for the investor worldview. In addition, it's worth
mentioning Tuesday's Fed meeting, which ended with an official take that a
U.S. economic recovery was on "firmer footing." By the end of the session,
the Dow had pulled back to close with "only" a 137-point loss to 11,855, the
Nasdaq lost 34 points to 2667 and the S&P 500 fell 15 points to 1282. Utilities
took it on the chin for a second straight day. The Dow Jones Utilities Index
slid 1.9%. And insurers faced rough sledding. Hartford Financial (NYSE: HIG )
fell 4.6%, while AIG (NYSE: AIG ) was off 1.9%. Despite a strong finish, stocks
remain subject to the same amount of volatility currently embedded in the fate
of Japan's citizens.