Early last week, investors had several reasons to celebrate as the S&P 500 crossed the 1200 point mark (up almost 50% from this time last year), the Canadian dollar reached parity with the American dollar, and the start of the first quarter reporting season had several companies reporting better-than-expected earnings.
However on Friday, American markets experienced their biggest drops in two months, when the Securities Exchange Commission (SEC) announced civil fraud charges against Goldman Sachs Group Inc. The SEC alleges that a hedge fund manager associated with the financial firm helped created a mortgaged-backed investment for clients, and then bet against the investment.
Markets opened lower Monday on morning as investors are concerned about potential long-term ramifications of this story, and whether the SEC might investigate other banks that traded similar securities. However by Monday’s close, markets had recovered the early morning losses and finished moderately higher.