Explaining Southern California's economy

Where is the January Effect in the stock market?

A trader shows a graph illustrating stoc

MIGUEL MEDINA/AFP/Getty Images

We got a nice bump in the markets at the dawn of the new year, but ever since then, results have been...well, pretty unremarkable. The Dow has been bumping along in a fairly narrow range, around the 12,400 level. So where's the vaunted "January Effect"— the idea that people sell stock in December to book some tax losses, then pile back in when the markets re-open after the holiday season.

The answer comes in one word: Europe.

Wall Street isn't going to budge until it either gets some great earnings news from U.S. companies or sees some progress on Europe righting its listing financial states. This is from AP, via the Washington Post:

Greece, Ireland and Portugal have all been bailed out but the fear in the markets is that much-bigger Italy and Spain may end up needing financial assistance. The yield on Italy’s benchmark ten-year bonds on Monday continued to hover around the 7 percent mark, widely considered to be unsustainable in the long run.

On the growth front, the two leaders told reporters that European nations should compare the continent’s best labor practices and implement them, as well as figure out how to use European funds to create jobs.

Their focus on the wider economy has come as mounting signs the 17-nation eurozone is heading for a recession have emerged over recent days, including figures Monday showing a bigger than anticipated 0.6 percent decline in German industrial production in November.

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