- Title: USA: U.S. stocks sink on Inauguration Day
- Date: 22nd January 2009
- Summary: NEW YORK, NEW YORK, UNITED STATES (JANUARY 20, 2009) (REUTERS) (SOUNDBITE) (English) ALAN VALDES, DIRECTOR OF TRADING, HILLIARD LYONS, SAYING: "The sell off had nothing to do with the inauguration. It's all about the financials. We saw it yesterday. We saw yesterday it started with the Royal Bank of Scotland while the American markets were closed. It came out horrible. It
- Embargoed: 6th February 2009 12:00
- Keywords:
- Location: Usa
- Country: USA
- Topics: Finance
- Reuters ID: LVA6F1NK5DG9NCMKMRDR2HJENIRG
- Story Text: Wall Street ushered in the Barack Obama presidency with a record Inauguration Day drop on Tuesday (January 20) amid fresh signs the global bank crisis was far from over.
High expectations for details on how the new administration would address the growing banking crisis and faltering economy were dampened after the inauguration speech concluded with little new information to digest.
Alan Valdes, the Director of Trading at Hilliard Lyons, said you can't blame Obama for the massive stock decline.
"The sell off had nothing to do with the inauguration. It's all about the financials. We saw it yesterday. We saw yesterday it started with the Royal Bank of Scotland while the American markets were closed,"
Valdes said.
"It came out horrible. It shook up all of the European banks,"
he added.
State Street Corp, the world's largest institutional money manager, spooked investors about what is considered one of the safest areas in banking when it said it had a 6.3 billion USD unrealized loss in its investment portfolio and lowered its outlook. Its shares plunged 59 percent to 14.89 USD.
The Dow Jones industrial average .DJI dropped 332.13 points, or 4.01 percent, to 7,949.09. The Standard & Poor's 500 Index .SPX slid 44.90 points, or 5.28 percent, to 805.22. The Nasdaq Composite Index tumbled 88.47 points, or 5.78 percent, to 1,440.86.
Since Obama won the election in November, Wall Street has been betting he will put plans in place to help stabilize the sliding economy and stem rising unemployment.
The negative tone for the financial sector was set in Britain by the Royal Bank of Scotland, which reported the biggest loss in British corporate history on Monday (January 19), when U.S. markets were closed for the Martin Luther King holiday.
The news sparked concerns about the global banking sector and hurt shares of financials, including JPMorgan Chase & Co, which was the Dow's top drag.
The KBW index of banking shares .BKX plunged nearly 20 percent to
34, its lowest level since 1995. The S&P Financial index .GSPF fell almost 17 percent to 108.33, its lowest level in 14 years.
Underscoring the widespread selling, the Chicago Board Options Exchange Volatility index .VIX, which is Wall Street's favorite barometer of fear, shot up 22.9 percent, its largest percentage gain since Oct. 22, when it rose more than 31 percent.
Although the S&P 500 has rebounded from its Nov. 21 intraday low, the broad index has fallen 10.9 percent this year on worries about the deepening global recession.
On Wall Street, workers seemed almost indifferent to Tuesday's stock market losses.
Robert Sharron, who works on Wall Street said, "The market is just like a cycle like anything else. In a few years it will be back, it will be strong, it will be healthy. You have to give it time. If he implements a plan, give the plan time to work and I'm sure well be better off as a country."
Another Wall Street worker, Frank Carr said, "They've promised an awful lot and I think President Obama needs to start to deliver. He had quite a bit of money in promises during the campaign and now he needs to start making good on that so we'll look forward to having him deliver."
But Murat Turk, who also works on Wall Street, says it will take more than Barack Obama to fix the U.S. economy.
"It's gonna be us, not just him. He's definitely an inspiring leader. Finally, you have an intelligent leader, but I think it's gonna be us that's gonna make the difference,"
said Turk.
Trading volume was active on the New York Stock Exchange, with about
72 billion shares changing hands, above last year's estimated daily average of roughly 1.49 billion, while on Nasdaq, about 2.02 billion shares traded, below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by almost nine to one, while on the Nasdaq, about six stocks fell for every one that rose. - Copyright Holder: REUTERS
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