Yesterday at 4 p.m. ET, the stock market closed, with the Dow Jones Industrial Average down a shocking 585 points, following a 150-point rally in the last 30 minutes of trading.
By 4:05, the Dow was down 777 points. But that's a little bit deceiving. Perhaps you'll remember a week ago, when, just after the bell, Berkshire Hathaway (NYSE: BRK-A ) A shares suddenly traded up more than $10,000 per share. First thing the next trading day, shares gave back nearly every penny.
What happened after yesterday's close was pretty simple: There were a few sellers (volume was not particularly heavy), and no buyers. These transactions therefore get absorbed by market makers, who ended up playing counterparty on tens of millions of dollars in trades. It seems no one wanted to buy into the howling of the overnight. These marked-on-close transactions had the effect of further distorting an already rattled market. It happens every day on Wall Street. Usually, there isn't so much volatility for investors to notice.
This morning, natch, the market rebounded almost 200 points, to approximately the level it held at 4 p.m. yesterday. Fantastically, Wachovia (NYSE: WB ) shares have nearly doubled, as people start to recognize that the rump company not taken over by Citigroup (NYSE: C ) , a debt-free investment manager, might not be that bad of a business.