Subscribe by RSS
The Obama Administration has sent the Stock Market into another downward spiral on news from both the President and his Treasury Secretary. The Global Markets aren’t liking it a bit, either.
The Dow plummeted 300 points Monday as Wall Street frets about the fate of General Motors and Chrysler and the potential for additional capital injections for the nation’s troubled banks.
Today’s Markets
As of 11:36 a.m. EDT, the Dow Jones Industrial Average slid 292.47 points, or 3.76%, to 7483.55, the S&P 500 lost 30.72 points, or 3.74%, to 785.39 and the Nasdaq Composite sank 57.56 points, or 3.73%, to 1487.64. The consumer-friendly FOX 50 fell 22.56 points, or 3.68%, to 589.85.
“People are looking at the distinct possibility that one or both [auto makers] will cease to exist,” said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research. “That’s enough to spook the markets.”
The ugly start to the week comes after the Dow surged nearly 500 points last week, capping its first three-week win streak since May. Amid new government rescues and rare signs of hope for the economy, the beaten-down Dow soared 17.34% over that span, its best three-week gain since Sept. 1982.
“You had a very significant rally over a very short period of time. That rally met a point of resistance,” said Sparks, pointing to the S&P’s 80-day moving average. “We were overbought to some degree.”
Shares of General Motors (GM: 2.84, -0.78, -21.55%) took a double-digit dive after the U.S. said GM and Chrysler’s restructuring plans do not go far enough to make the auto makers viable. The government is giving GM 60 days to reach new concessions with the union and bondholders and did not rule out bankruptcy.
The U.S. also pushed for the resignation of CEO Rick Wagoner, who will be replaced by Frederick “Fritz” Henderson, GM’s chief operating officer.
“The government is taking a more heavy-handed approached. The market never sees that to be good,” said Frank Davis, director of sales and trading at LEK Securities.
Chrysler, which is owned by private equity firm Cerberus Capital Management, was asked to finalize a partnership with Fiat by April 30. If a partnership cannot be put together, the Obama Administration is prepared to withhold any additional government aid – effectively sending Chrysler into bankruptcy reorganization or liquidation.
There was growing skepticism amongst traders about the ability of the auto makers to quickly reorganize and what the ripple effects of bankruptcy filings would look like.
Meanwhile, financial stocks like JPMorgan Chase (JPM: 25.64, -1.78, -6.49%), Citigroup (C: 2.37, -0.27, -10.23%) and Bank of America (BAC: 6.38, -0.97, -13.2%) took a dive after Treasury Secretary Timothy Geithner said on ABC’s “This Week” that some banks are going to need “large amounts” of additional government aid to stay afloat.
Fears about the length and depth of the 16-month recession were also evident as shares of basic material companies like aluminum maker Alcoa (AA: 6.82, -0.98, -12.56%) and U.S. Steel (X: 21.33, -2.958, -12.18%) plunged.
In the commodity markets, oil slid $2.34 per barrel to $50.05 a barrel while gold rose $3.20 per ounce to $928.50.
Global Markets
European stocks took a dive as London’s FTSE 100 dropped 2.03% to 3819.68, Germany’s DAX slid 3.1% to 4073.03 and Paris’ CAC 40 fell 2.23% to 2777.37.
In Asia, Tokyo’s Nikkei 225 plunged 4.53% to 8236.08 while Hong Kong’s Hang Seng tumbled 4.7% to 13456.33. China’s Shanghai Composite fell 0.7% to 2358.04.
Stay tuned for further updates on the Market as it relates to the political news of the day.
Visit the You Decide Politics Store »
Loading ...
But not to worry, Wallstreet isn’t Mainstreet, right? Sure.
Can anyone name ONE Government controlled business that has been successful? Please, I’d love to hear it.
I’m sure JD will be here soon to tell us that this dive has nothing to do with government takeovers of private corporations, just move along, nothing to see here.
AmTrak has been successful as a government owned company. Or wait, AmTrak has been an abysmal failure under total government control so never mind.
Once again, this is madness for the Obama minions to be so involved in private industry, it’s insane.
Where are the checks and balances anymore?
He may try, but the numbers don’t lie. There’s no rebound in sight so far today.
lol. What did I say to you babs? I said I expect that the market will be up 3000 points in 6 months. Lets see in October.
Also, when the market falls sharply, it tends to recover sharply. Bad news always upsets the markets. Nothing Obama would have done would have been good news. If he would have said that there is no more money for any auto manufacturers that the market would have fallen.
Bad news is bad news. lol.
What did you say to me, JD???? What did I say to you! And no, when the market REALLY falls sharply, it does NOT tend to recover sharply – nor quickly.
What’s wrong, no defense for Obama’s actions today? Don’t you agree with your President firing a private company individual, and taking over the sales and warranty divisions of that company?
Yes, wouldn’t you like the government providing the warranty for your car? It’d be like the efficiency at the DMV for auto repairs, only 10 times worse.
In fact, I have to think that government warranties are going to dissuade people from buying, not entice them. Who trusts the government to handle something to do with distributing cash and assessing vehicle damage? Not me.
Hey, i own a Volkswagen.
lol. Didn’t the government get involved in the private market when monopolies got busted… and other such cases. What president did that??? Can’t remember.
Desperate times call for desperate measures. Too bad you all can’t see that. When WWII happened we didn’t sit on our hands and say…well that has never been done before. No we took extreme measures.
How can you compare a monopoly, which is illegal, to a failing company, which is perfectly legal under our capitalist system?
Doesn’t the government have an obligation to enforce the law against a monopoly? Of course!
Where is the same obligation to give taxpayer money to a failing private company? That one I can’t find.
Explain.
I’m all for extreme measures. I say lets march on Washington and take the White House back. How’s that for liberal ideas, JD?
Nate… the point is that it is government intervention. Legal or not.
As for giving money to a failing company…It depends on what you call a failing company. A failing company does not mean a dead company.
The US auto industry can easily come back. Again, you assume sick as dying. A sick human doesn’t mean a dead human. Just means it might need surgery or kemo to help with the cancer.
Babs, Liberals did march on Washington over the war with Iraq and Conservatives laughed and called us un-american. lol. Although, I don’t agree with your points a lot of the time, I do agree that you should have the right to speak up but just like you all did during the bush administration…It doesn’t mean we always listen.
You’ve never listened, JD. Neither does Obama. *L*
With the government ANNEXATION of corporate America TAKING US DEEPER INTO SOCIALISM isn’t it ironic that we now have any head of a government organization called a CZAR? The government backing of a warrenty on GM products is equating it to MEDICARE FOR YOUR CAR.And we all know how solvent that is!
When my husband got home last night and listened to Obama’s portion of his speech where he was promoting sales and garaunteeing warranties, he said the man sounded like a Used car salesman doing a commercial. I laughed, but I agreed, too.
Babs……..CEO Rick Wagoner was heard to whisper”
“I thought the President ran on change ….not CHAINS”
If we want to afford a car maybe we should run for Congress.It seems Congress LEASES CARS AND PAYS UP TO $1000.A MONTH.You can find the story at:
http://www.nydailynews.co.....tos_r.html
That’s hilarious, DD, and I wouldn’t be surprised WHAT Rick Wagoner was whispering! I heard this morning that if GM go Chap. 11, Wagoner will lose his $20+ million exist package. No wonder he wanted to avoid bankruptcy.