This week saw the year-to-date gains lost in just a few days’ trading.  Selling pressure came from two directions: first, an already-nervous market was primed to sell on earnings news. Second, the political rhetoric on healthcare and banking reform spooked many investors. The week ended with the Dow down 4.19%, the S&P down 4.65%, and the NASDAQ down 4.83%.

There has been concern that this is the beginning of the long-feared correction.  However, we believe the drop is short-term in nature, and depending on the severity, could present a good buying opportunity.

This idea of reform should not concern the market.  Rep. Barney Frank said that he would not let the banking reforms pass as described.  If any proposed bill does fail, it should assuage the fears of investors and help these losses be recovered.

Next week is a heavy earnings week, which we will be watching closely.  It is a light week for economic data.  While we will certainly be in tune to fresh data in housing and employment, the standout figure is the fourth quarter’s GDP number.