Why the Dow's Down Today (^DJI, BAC, C)

Why the Dow's Down Today

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The Dow Jones Industrial Average (INDEX: ^DJI ) is currently down 35.08 points, or a 0.27% loss. Most financial news stories are focusing on the situation in Greece as the driver of today's market. The embattled country is in negotiations with European leaders on another bailout, but has yet to agree to austerity measures -- or budget cuts -- that are a condition of the country receiving more funds.

However, blaming Greece for falling markets seems more like a story of convenience that an actual market-moving action. Consider that the Greek subplot has hung over the markets for the entirety of 2012, yet the market has been stunningly steady across the beginnings of 2012. Last year, 35% of trading days, or 89 days in total, featured the Dow Jones up or down less than 1%. This year, only two out of 23 trading days have resulted in a move more than 1%. There has yet to be a day the Dow is down more than 0.58% this year!

While the Greek saga gets a lot of press, it's had little effect on the market this year. If investors are looking for a more important storyline in today's markets, I'd point them toward the mortgage settlement that looks close to being finalized. California, which has been a hold-out from negotiations in recent months, is back to making a deal. While the $25 billion settlement would be a blow to banking balance sheets, it'd also remove a good deal of uncertainty from large mortgage servicers like Bank of America (NYSE: BAC ) and Citigroup (NYSE: C ) . Both companies showed large gains when the mortgage lenders agreed to increase the settlement to $25 billion on Jan. 23.

So if you're watching the market today, remember that even if constant bickering over a Greek default might feel like it's causing instability, volatility has actually been fading since the new year began. Investors long ago realized Greece wasn't good for its debts, so whether the country technically defaults, reaches an agreement to pay back debt at pennies on the dollar, or gets bailed out again, investors appear to have moved on and made their peace with Greece's fiscal disaster.

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Report this Comment On February 06, 2012, at 2:40 PM, skyisfalling wrote:

I have only questions regarding the misery that the housing business brought upon the banking industry. All the penalties that the fed and the state governments and the consumers are heaving upon the banks seem to me like the country is cutting its own legs, the penalties should be commensurate with the gains that the banks earned from financing the consumers' appetite for houses, be that legitimate or "flipping". I have a feeling that we have lost our senses and looking for vendata for our misfortune that is forcing us to discontinue paying for mortgages resulting in activation of CDS by people who bought the bundled MBS and since CDS was not under any watchdogs brought in misery and so on. But the appetite for housing was encouraged by the fed and not the banks and whatever may be case the banks are marked for the "fall guy" and the parties bringing case after case against the banks should bear in mind not to lose the perspective of the roles played by banks in the functioning of the society, a society can not prosper with a crippled banking industry. When will we hear the last of the cases against this valuable industry! May be we want the banks to be like a utility company with a watchdog prescribing how much money the banks should earn. I have never heard a Utility Company being sued.