Discussion-Activity: Wall Street rallies

1. What happened to the stock market on Friday? What kinds of stocks are part of the Dow Jones Index? What kinds of stocks are found in the Nasdaq? Can you think of any examples of high tech stocks? How did some of these stocks close today?

2. What does it mean when it is said that investors are "jittery"? How might Friday's performance of the Dow and the Nasdaq make them nervous on Monday? What actually happened to the market today? What is a rally? Today's rally was led by investment "bargain hunters." Why would a sharp decline in Friday's market trigger a surge of bargain hunters today?

3. Generate a class discussion about volatility as the term applies to stocks. Inform students that one well-known market strategist, Abby Joseph Cohen, told her clients Monday that recent stock volatility has been fueled more by market factors rather than a change in fundamentals. What "market factors" might account for stock volatility? Divide students into groups, and have each group select one of these factors to research, and explain its possible impact on market volatility:

• Investor confidence
• Tech stocks selling at 100 times earnings
• Margin selling
• Better-than-expected first quarter earnings
• The strength of the financial sector

Have each group present its research and explanation. Discuss the role of each of these market factors in influencing a bull or bear market. Solicit student opinions for the immediate future of the stock market: Was Friday's action a temporary correction or should investors be nervous?

News terms:

Bull market
Bear market
Dow Jones
Nasdaq
Blue chips
Bargain hunters
Investor confidence
Volatility