Today, the stock market closed at its lowest level since Bill Clinton was President and Monica Lewinsky’s blue dress was still unstained:
Major stock market indexes tumbled today to their lowest levels in 12 years on skepticism over new details of the government’s plan to ease terms of their investment the country’s ailing banks.
The Dow Jones industrial average closed down 251 points, or 3.4 percent, to 7115, a level not seen since the bull market of 1997. The Standard & Poor’s 500-stock index dropped 27 points, or 3.5 percent, to 743, another 1997 record. And the tech-heavy Nasdaq composite index fell 54 points, or 3.7 percent, to 1388, a seven-year low.
“Basically, it’s a disaster,” said David Dietze, chief investment strategist of Point View Financial Services. “There’s much more pain ahead.”
The day began with the Dow and the S&P rallying briefly after federal regulators made their announcement this morning on banks, which allows companies to give the government preferred shares that can be converted into shares of the company’s common stock. Share prices of the nation’s biggest banks shot up by double digits.
But those gains were quickly wiped out by fears that the move was a step toward nationalization of the banks and underlying pessimism over the future of the economy. Todd Clark, director of equity trading at Nollenberger Capital Partners, said he would not be surprised if the Dow fell below 7000, an important psychological benchmark for investors. The Dow last hit 7000 during the bull market of 1997.
“It could happen,” he said. “Basically, the market’s giving you no vote of confidence on the Obama administration’s approach to solving the economic woes the country is facing.”
That’s not an unfair interpretation once you take a look at how the Dow, S&P 500, and NASDAQ have performed since Inauguration Day:
Not a ringing endorsement I must say.
I’m sorry, but this concept of blaming Obama for the stock market is so retarded. And I would say the same thing if it were Bush or McCain. Take a look at the market’s course since October 2007. Looking only at the chart since January 20 ignores the reality that we’re experiencing a rather epic bear market that began — and suffered the majority of its losses — before Obama became president. If he had been able to magically turn it around in a month, he really WOULD be the Messiah. As it is, his economic policies are swimming upstream against the Niagara River a few hundred yards from the falls.
It’s not Obama’s fault B of A and Citigroup are insolvent. It’s not Obama’s fault consumer demand has fallen off such a massive cliff that even beer sales are way down. It’s not Obama’s fault that even the smartest minds in economics seem to have no idea how we press the “restart” button on an economic scheme that was fundamentally based on the notion that consumers would keep spending forever and ever, no matter how much debt they (and we collectively) have.
Obama’s policies may or may not work as well as some other hypothetical set of alternative policies would have worked. But it’s very difficult to imagine ANY policies that would give investors reason to be truly optimistic right now. If anything, what’s happening with the markets is a return to where we naturally would have been in November, December and January if not for a bit of irrational exuberance surrounding the notion that Obama, Geithner, et al would be able to magically fix everything. What, after all, were those December-January gains based on? Hope and Change! Now that traders are looking at hard economic facts again, instead of rallying on the basis of unfounded optimism, we’re heading back in the direction we were heading last fall, during the last days of the Bush Administration: down, down, down, down.
Blaming it all on Obama is just asinine. He didn’t make this mess; he inherited it, and the jury is still out on whether he’ll be able to (help) fix it. But one thing is certain: if he’s going to be able to fix it, it’s going to take time, and investors are going to need to see some actual results before they start to get optimistic again. Things look so bleak right now that hope and change just don’t cut it.
Granted, it’s not all Obama, but the market clearly isn’t enthused by what it’s seen so far.
And why would they be enthused? More of the same from D.C.