Stocks Extend Rally, GE Soars

Barring a late-day collapse, it looks like markets are putting together a three-day winning streak. Just-downgraded GE is leading the charge. The stock is up 13%, to about $9.50.

To some extent, S&P’s downgrade was totally meaningless. Everyone knew it was coming, and besides, S&P is always behind the curve, right? That’s true, but to some extent you have to assume that S&P has been given a deeper look into GE’s books than any investor. Last week, CFO Keith Sherrin noted that the company has been in constant communication with the ratings agency.

So if you think S&P has any ability whatsoever to judge credit risk, it’s reasonable to take today’s single-notch downgrade as a good sign. Maybe it’s not that bad.

On the other hand, S&P may still be totally worthless and today’s buying could be totally unrelated to any actual news or judgments.

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