Wall Street had a very, very good day for a change yesterday as the Dow soared 936 points, the biggest single-day point gain ever. The Dow roared back from worst week ever. The last week had seen about $2.4 trillion in shareholder wealth wiped out. The eight-day losing streak drained 2,400 points from the Dow, or 22 percent, roughly equal to the 1987 crash and enough to establish a bear market all on its own.
As a percentage, the Dow closed 11.1% higher, the fourth best in market history. This was a huge relief from eight consecutive days of stock market carnage.
Now I caution against thinking we are through the woods yet. No one should be saying that the worst is over for our staggering financial system or troubled economy. Wall Street is not a great barometer of the economy, and I believe it has become too much of the focus of our economic health. It is good to have a day like yesterday to help with the malaise, to improve people's confidence, and to get money moving again, but we are not through the crisis yet.
The dow will continue to move up and down, and it will continue to look like a roller coaster. Wall Street still has a lot to worry about, including a housing market that is still groping for a low point in prices and shoppers who are spooked by job losses and other ominous economic signs and are cutting back on their spending.
It is too soon to say for sure whether lending will finally loosen up with the new government intervention announced this morning at the White House. The sell-off on Wall Street last week was driven by fear that mistrustful banks were choking off the everyday loans that businesses use to buy supplies and pay their workers. If the credit market does not open up soon, yesterday's gains will be lost again.