With the glaring exception of Facebook, stocks rose modestly Monday morning amid hopes global policymakers will try to stimulate growth rather than focusing on austerity.
At Saturday's meeting at Camp David, G-8 leaders stressed their "imperative is to promote growth and jobs."
Separately, and perhaps more importantly, Chinese Premier Wen Jiabao declared this weekend "to prevent the economy from slowing down too rapidly is of great urgency."
In addition, Atlanta Fed President Dennis Lockhart reminded traders that the Fed could do another round of quantitative easing if the global economy weakens further. "I do not think this option can be taken off the table," Lockhart said in a speech in Tokyo. "QE3 will work under the right circumstances."
In recent trading, the Dow (DJI) was up 0.7% and the S&P (GSPC) up 0.9% following solid gains in Germany and France. It's a respectable showing but a fairly tame 'dead cat bounce' considering the blue-chip U.S. index has fallen 12 of the past 13 sessions and is coming off its worst week since last Thanksgiving.
Obviously there are a lot of issues weighing on investor psyche. Beyond general concerns about the global economy and fear of a "disorderly" unraveling of the eurozone, the botched (and now broken) Facebook IPO delivered yet another blow to investors' already fragile confidence. In early trading, Facebook (FB) shares fell to as low as $33.00, down 13% from Friday's initial offering price of $38. (See: Facebook IPO Latest Blow to Investor Confidence)
As Henry and I discuss in the accompanying video, seemingly about the only thing holding up the market right now is the potential for another round of global stimulus, via monetary or fiscal -- or some combination thereof.
Given that each successive round of stimulus, at least by the Fed, has resulted in a shorter and shallower boost than the one prior, that's a tenuous prop for a very shaky market.