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U.S. markets on Monday swung high, then low, then high again in a dance that mimicked the markets of October when motion sickness was possible.
In the face of increasingly better economic data, U.S. markets notched 10 triple-digit bounces in October, the Dow Jones industrial average rising 200 points last Thursday and dropping 250 on the following day, for example.
Monday's news that pending home sales rose for the eighth consecutive month, construction outlays increased in September and Ford Motor Co. earned nearly $1 billion in profits in the third quarter did little to steady the numbers on the big boards.
The major news from the previous week, that the recession had receded with a 3.5 percent gain in the gross domestic product in the third quarter, seems to have had little effect.
A rise in manufacturing activity for the third consecutive month in October indicates a fundamental shift from an 18-month slide. Even the employment component in the Institute for Supply Management's October report showed growth, for the first time in 14 months.
Where investors appear decisive, however, is in commodities. With China's Purchasing Managers Index showing the fastest growth in 18 months in October and the PMI rising in Europe for the first time in 17 months, the oil market shows clear signs of a growth spurt with a new norm in oil prices settling around $80 per barrel.
The tentative -- some would call it volatile -- markets could be explained through a report released by the private firm Automated Access to Court Electronic Records, which keeps track of bankruptcy data.
After two months of declines, AACER reported 7,771 businesses sought court protection in October, up from 7,271 the month before.
Not only did bankruptcies accelerate, but lender CIT Group's filing Sunday could include a double-bounce among the 1 million business clients who count on the New York firm for loans.
CIT has prepared what it called a "prepackaged" bankruptcy, which could see the firm emerge from court controlled by creditors by the end of the year. CIT said it would conduct business as usual, but the scare is palatable. If loans drop, it is likely commercial bankruptcies will rise again.
In addition, stricter personal bankruptcies laws adopted in 2005 thwarted the efforts of many individuals to file for protection, but the numbers of individuals turning to the courts is also rising.
From January through September, AACER reports 1.07 million individuals filed for court protection, in part because lending is tight.
"When people can no longer borrow on their credit cards to stave of the day of reckoning, they end up in bankruptcy court," said University of Illinois law professor Robert Lawless, Bankruptcy Statistics reported.
Balancing out the ups and downs, the U.S. Federal Reserve's Open Market Committee will make an interest rate announcement Wednesday. If the Fed raises rates, investors will have to decide if that constitutes greater confidence in the recovery or another blow to lending.
In market movement Tuesday, the Nikkei 225 index in Japan lost 2.31 percent while the Shanghai composite index in China rose 1.22 percent. The Hang Seng index in Hong Kong dropped 1.76 percent while the S&P/ASX in Australia slipped 0.2 percent. In India, the Sensex index tumbled 3.09 percent.
In midday trading in Europe, the FTSE 100 in Britain lost 2.15 percent, while the DAX 30 in Germany dropped 1.9 percent. The CAC 40 in France lost 2.18 percent, while the pan-European DJ Stoxx 50 dropped 2.15 percent.
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