Wall Street Rally Takes a Breather
Talk of bubble triggers selling.
Bryce Knorr
Published: Jun 23, 2009
After breathing a sign of relief when the global financial system didn't collapse in March, most asset classes staged a nice rebound rally. But that bounce has come to an end, at least temporarily, as investors take profits and head to the sidelines to see if the dark clouds of recession gather again.
Two factors appeared to cause this burst of prudence. First, the steep run up in prices, especially in crude oil, stirred up talk of another bubble — well, a mini-bubble, really. That was enough to trigger selling that rallied the dollar as money managers unwound carry trades and reined in their appetite for riskier bets.
Traders also seemed spooked by news the World Bank had lowered its forecasts for 2009 and 2010, predicting the recession would be deeper than expected and produce a more muted recovery next year.
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