I found this article to put things in proper context.
“The typically short memories of the markets have already put the US sub-prime meltdown behind them.
It’s as if investors think that, because the roof hasn’t caved in on the entire sector yet – despite some high profile casualties – it never will.
And a rise in pending home sales in the US in February had the optimists out in force yesterday, driving the Dow Jones up 128 points to close at 12,510, a five-week high.
So is all right with the world again?
The National Association of Realtors said that pending US home sales rose 0.7% in February, helping to drive the Dow Jones index to a triple-digit gain.
But investors would do well to remember that pending sales are still down 8.5% on last year. And more importantly, even the NAR admitted that sales might be experiencing “some fallout from a decline in subprime lending.”
As one analyst quoted on Markwatch argued, investors are clutching at straws. “Pending home sales data, when did that become a market moving piece of information?” said Eliot Spar of Ryan Beck & Co. “When the market is range bound, it doesn’t take much to move traders off the fence as they extrpolate one data point into a trend.” In other words, one swallow doesn’t make spring – and there’s plenty of other news to suggest the sub-prime debacle is far from over.”
