Bad day on Wall Street. Not even the spectre of the monster “stimulus” spending package on it’s way to some sort of inevitable approval failed to “stimulate” Wall Street as financials, materials and homebuilding stocks withstood some of the largest sell offs today.
The Down closed at 7888.88, down 381 and, per Investors Business Daily’s Juan Carlos Arancibia, the worst day of the year for those indexes.
In the hourly updates, at 11:15 eastern time, the sessions were hitting lows just ahead of Geithner’s anticipated comments on the details of the banking plans. But when the Treasury Secretary spoke, it sent all the wrong messages.
The market plunged as Treasury Secretary Timothy Geithner offered few details on a plan to revive the financial sector
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Calling critical parts of the financial system “damaged,” Treasury Secretary Timothy Geithner unveiled a plan to buy bad bank assets and other measures to boost lending. But details were sparse and the stock market plunged.The Dow sank 3.5%, the Nasdaq 3.1% and the S&P 500 3.7%. The NYSE composite dove 3.5%. Volume was higher across the board.
Under the plan, banks will be put under a stress test. They then will get new capital support that will be a bridge to private capital.
Then new funds will be made available to target legacy loans that are weighing financial institutions. To begin, $500 billion would be made available, with an equal amount as an option for later.
Also, the government will launch a program to revive the mortgage market. But Geithner said details of this plan will be unveiled in the next few weeks. That sent the market selling after it had started recovering from early losses.
Financials hit new lows. Bank of America (BAC) spiraled down 15%. Wells Fargo (WFC) and Citigroup (C) both sank 11%.
Regional banks Huntington Bancshares (HBAN) dropped 18% and Fifth Third Bancorp (FITB) shed 19%. The SPDR Financial ETF slid 6%.
Ah, but the day was young. True to form, the Senate plowed thru and passed the pork passed off as stimulus in the vote. Result? The bottom dropped out of the market.
Indexes drilled deeper into losses despite news the Senate had approved the administration’s $838 billion economic stimulus plan in a midafternoon, 61-37 vote.
The NYSE composite and S&P 500 buckled to 4.7% losses. The Dow unraveled 4.5% and the Nasdaq composite slid 4%.
Financials continued to dominate the downside. But Alcoa (AA) and General Electric (GE) both also weighed in with 9% losses. Boeing (BA) nose-dived 6%. All three are Dow components. Homebuilder Lennar (LEN) was the only nonfinancial stock among the S&P 500’s 20 biggest price declines.
Volume held at about 30% higher on both exchanges.
Forward Air (FWRD) dropped 11% in fast trading after offering Q1 guidance that halved prior consensus views. The news led to a Stifel Nicolaus downgrade of the stock from buy to hold. The move drove shares below 10-week support after two straight weeks of gains.
Property and casualty insurer WR Berkley (WRB) drove 7% lower after reporting Monday its Q4 EPS dropped 36%, well below estimates. Revenue slipped 23%. Shares are 26% below their Dec. 31 peak.
Right…. this is really gonna work….
All I can say, if this is Obama, Geithner and Congress’ idea of “help” and rescue for America’s financials, can someone please send them all home before they do yet more damage?
But here’s the smile for the day. A bright spot on Wall Street afterall… fertilizer maker Terra Nitrogen (TNH) muscled up 2% in powerful trading.
Apparently selling shit is still profitable… as Congress aptly proves.
Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.
while at work i have been asking clients how they feel about the bail out and the stimulus crap. we have a pretty good cross section of people in our shop, doctors and lawyers on down to stay at home moms, and most are pissed about the bail out and all of the debt we are racking up. nobody is really sure what the answer is, but they pretty much feel this is wrong because of all of the bullshit in it. this is so wasteful and as i said before, i cannot comprehend this amoust of money.
CNBC had on one fellow who said that “these guys don’t know markets“.
He went on to explain that Treasury Secretary Timothy Geithner hadn’t disclosed a “plan” today, but rather gave a “broad” outline of a plan which, as far as the markets were concerned, was worse than nothing.
Geithner should have waited until the plan was complete rather than creating new uncertainty in the market with “vapor”.
Give the ‘chosen one’ a few more days and he will have assisted the congressional democrats who have cut the stock market in half and doubled the unemployment rate in slightly over 2 years.
“Apparently selling shit is still profitable… as Congress aptly proves.”
I’ve noted lately quite a few in the world wide web are calling it a “crap sandwich.” Could be why “.. selling shit is still profitable.” Think I will advise hubby to buy some TNH, pretty sure they will be dishing plenty of it out for quite some time.
This is why I have shorted the markets. Until something reasonable passes, the market will continue a slide down.