NEW YORK — Stock prices shot up 24 percent from late November to January, fell 7 percent in the first week of the new year — and then stood still.
Welcome to the bear market.
Wall Street has lost some of the enthusiasm that powered its late 2008 rally. The Dow Jones industrials have fallen for five straight days as investors questioned whether they got ahead of themselves when they bet in December that the economy and corporate profits were about to recover.
“The wind has sort of been taken out of the sails,” said Carl Beck, partner at Harris Financial Group. “The optimism that we saw at the beginning of the year has sort of been put on hold as people await earnings reports over the next couple of weeks.”
With companies issuing warnings about their revenue and profit over the past week, the safe play on Wall Street has become to throw out analysts’ already lowered expectations and expect results will fall well short.
Alcoa started the reality check. The aluminum producer warned last week results would be bad and that it was slashing production. Then, late Monday, the company said it lost $1.19 billion during the fourth quarter as demand for aluminum plunged. The stock slumped 5.1 percent Tuesday.
Alcoa’s report marks the unofficial start to the three-week rush in which most companies report their results.
“Alcoa is a harbinger of things to come,” said Jeff Buetow of Portfolio Management Consultants.
Meanwhile, Citigroup and Morgan Stanley announced a deal after the closing bell to join brokerage operations as Citi struggles to raise additional cash.
Worries about banks sent the Dow down 25.41, 0.30 percent, to 8,448.56. Broader indexes advanced.
Meanwhile, Fed Chairman Ben Bernanke said in a London speech that the stimulus package being crafted by President-elect Barack Obama and Congress could provide a “significant boost” to the sinking economy.
