Mubarak Resigns, What’s Next for Stocks?
Finally, there’s some sense of stability in Egypt. Hosni Mubarak finally resigned as president of Egypt and the stock markets rejoiced. Actually, the stock market rejoiced twice — once to his “rumored” resignation yesterday and then his actual resignation today.
I last wrote about Egypt last week and many of my predictions have come to fruition the past few days.
When rumors of his resignation surfaced yesterday, the stock market rebounded sharply (particularly tech stocks) from an early fall due to weak earnings forecasts from Akamai (NASDAQ: AKAM) and Cisco (NASDAQ: CSCO). The rumors definitely salvaged the day and prevented it from being a triple-digit drop in the Dow.
Last night, Mubarak gave his speech and shockingly refused to step down. However, since the U.S. markets were closed during his speech, the U.S. stock market didn’t suffer like the European markets did. Shortly after the U.S. market’s opened, Mubarak announced his resignation and we got yet another boost from Mubarak. So in essence, our stock market got a double-dose of good news from Mubarak’s resignation.
With the uncertainty in Egypt finally over, the market will probably turn it’s attention back to economic reports. If the economic reports look favorable, the stock market may enjoy another week of strong performance — particularly the large caps. Even if it doesn’t, the losses should be fairly tame. As I said in earlier posts, any market drops should be tempered by individuals (who have been missing out on 2009 and 2010 market gains) wanting to get back into stocks.
On a side note, it’s interesting to see more evidence of individual investors coming back to the stock market. U.S. Stock fund inflows more than doubled during the week. Here’s another article that talks about US stock fund inflows.
That all good news for the bulls — at least, for now.
