Thursday, March 5, 2009 Since Barack Obama was sworn in as president on Jan. 20, stocks have tumbled to record lows — with investors losing an estimated $2.5 trillion in market value.
The trend continued Thursday, with the Dow closing down 281 points, a 4.1 percent drop for the day. Since Inauguration Day, the Dow has fallen 20.4 percent.
All week, negative headlines have competed with the slumping market ticker, including early news Thursday that General Motors might well go bankrupt despite billions in taxpayer loans.
As selling sped up, Citigroup traded at one point under $1 a share, General Electric dipped under $7, and international financial names like Barclays saw declines of nearly 30 percent on the day.
"Everybody is so bearish right now that you would expect to be in the midst of a counter-trend rally," Steven Goldman, market strategist at Weeden & Co, told CNNMoney.
"But the implosion in the banking and insurance sectors is just overwhelming."
Obama has moved aggressively on economic and fiscal policies. But investors — if the market is any indication — are giving his initiatives a chilly response.
On Feb. 17, Obama signed a stimulus bill worth $787 billion — the largest spending bill in history. But the Congressional Budget Office indicates only 20 percent of the funds will be spent this year, and the nonpartisan group suggests that the package could do more
economic harm than good.
Obama also gave the green light to an omnibus $431 billion House Democratic spending bill laden with close to 9,000 pork-barrel spending items.
Plus, Obama revealed that he plans increase marginal tax rates on those earning more than $250,000.
The new taxes will yield more than $1 trillion in government revenues, but some economists believe the news of increased taxation will suck the wind out of any economic recovery.
In the middle of the market meltdown Thursday, Obama spent the day talking about a massive increase in healthcare spending, including a proposal in his budget that sets aside $634 billion in a 10-year reserve fund to pay for expanded care.
The drumbeat of bad news was too much for stocks, including:
• U.S. bankruptcy filings surging 31 percent in 2008.
• More than 600,000 Americans filing claims for jobless benefits for a fifth straight week, the worst performance since 1982.
• U.S. factory orders falling for a sixth straight month in January, official data showed.
• One in every eight U.S. households with mortgages ended 2008 behind on payments or in foreclosure, reported the Mortgage Bankers Association.
"The auto industry is effectively being wiped out or nationalized, however you want to think about it," Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, Calif., told Reuters.
"Now you're talking about a good portion, if not all, of the banking sector being wiped out. It's just getting relatively dire."
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