AUCTION WEAKNESS ROILS MARKETS - AT 3:32 P.M. ET: 

NEW YORK (AP) -- Stocks lost ground Wednesday after a weak auction of U.S. government debt stirred worries about how easily Washington will be able to raise money to fund its economic rescue program.

Investors gave an unexpectedly cool response to a $24 billion auction of 5-year Treasury notes Wednesday, just a day after a $40 billion auction of 2-year notes suggested strong demand. Treasury prices also declined following the auction.

The government is running up record deficits in order to fund an array of plans to provide stimulus to the economy and support to the ailing financial system. Any suggestion that demand for U.S. government debt is weakening would be negative for stocks.

COMMENT:  Not the last word, of course, but in the great Depression there was usually a mixture of good and bad news.  The key issue, at least as far as most Americans are concerned, is the "real" economy, the Main Street economy.  There we've been getting a mixture of good and bad reports.

We are also affected, especially in international trade, by the economies of other countries, and some of the European nations are taking a beating.  One exception is the Czech Republic, where a center-right government, which resigned yesterday, seems to have kept things reasonably stable.

March 25, 2009