Week in Review for Financial Week Aug 8-12

Each day of this week has seen the Dow Jones industrial average swing at least 400 points. The week started with a 634-point plunge Monday responding to S&P’s Downgrade of US debt, but on Tuesday, the Dow soared 429 points after the Federal Reserve's announcement on the economy and interest rates Tuesday. The Dow bounced up 100 points, then fell 400 points, and then roared back more than 600 points — all within an hour and a half. Wednesday showed the Dow continuing its free-fall erasing all of Tuesday’s gains and some with a 520 point decline. Global financial markets rebounded sharply Thursday after a drubbing Wednesday, extending one of the most volatile streaks in history for stocks. The Dow Jones Industrial Average surged 423 points. It marked the first time in the index's 115-year history that it has moved by more than 400 points for four consecutive days. Friday ended with a 125 point rally in the Dow ending the week  just 1.5% lower, surprising after the volatile week we have had.
The current market mayhem was kicked off by concerns about a wide range of economic problems, including seemingly intractable unemployment in the U.S., political paralysis in Washington, continuing weakness in the financial system and over-extended European governments. The sheer number of moving parts that investors are trying to keep their eyes on has made it hard to stay focused on any one problem.  With many economists now fearing the recovery is in jeopardy of reversing into recession, it may be some time before Wall Street can find its footing again. Ultimately, stock markets are driven by corporate earnings which are improving.