Alec Harrison stands outside the NASDAQ Marketsite
Not that it's a rally, exactly — even those modest gains were eroding as noon approached — but clearly something happened besides Alan Greenspan's bullish comments on free trade before the Senate (although a brief mention of the slowdown, with no bearish comments along with it, may have played a tiny part). TIME investing columnist Dan Kadlec has a few ideas...
TIME.com: Let's start with yesterday's sell-off.
DK: A brutal day. Everybody was selling hard, and everything was down — you almost couldn't find a stock that was up. All these bellwethers were hitting lows, and in fact, yesterday almost half the NASDAQ 100 was sitting at 52-week lows. That's a really bad statistic.
And Wednesday morning?
DK: It's a bit of a mystery. At first I thought it was Greenspan, but he didn't really say anything to seriously affect sentiment. It looks like one of those snap-backs, when the world realizes all at once that things are looking cheap.
Are they?
DK: Maybe. The key is whether Wall Street has finally priced in all the bad earnings news. The best example of that happened last week, when I2 announced lower-than-expected earnings, but the stock popped — apparently the "whisper number" was even lower.
The first quarter just ended, which means another round of bad news is coming. But everybody already knows the first quarter sucked. So this round is going to be a little bit quieter, because when it comes to the important part — what they say about the rest of the year — hopefully everybody has warned about the worst already.
So there's a chance that there'll be no serious surprises. If a company has already warned, and it's still a surprise, well, shame on them. With the outlook as glum as it has been, you've got to warn sufficiently, and there's a good chance most of the companies have heeded that.
Is there any significance that the Dow on Tuesday nearly cracked bear territory — 20 percent losses — again?
DK: None. In this climate, 20 percent isn't that serious a decline, and the biggest problem for the Dow isn't that it's going down, it's that it's not going up. As long the Dow stays above 9000, there isn't anything to be particularly concerned about.
And overall?
DK: Well, the fact that the selling from Monday and Tuesday seems to have halted is another sign that stocks may be getting to the point where they're as low as they're going to go. If the earnings reports over the next few weeks don't have anything unexpected, and unless economic conditions deteriorate, traders may be getting ready for a rally.