Dow plunges 297 as stimulus bill is signed

Two consecutive days of lower stock markets around the world were too much for the US markets to overcome. Dow tried for a recovery rally late in the day, but that fizzled. Dow sank 297, decliners over advancers 9-1 & NAZ fell 63. The BigCharts widget on the right tells it all. Dow plunged on the opening & pretty much sat there for the rest of the day & closed at the lows.

Meanwhile Treasuries went up on aggressive buying. The 10 year Treasury bond rose sharply, reducing the yield 22 basis points to 2.66%. The yield had dropped to nearly 2% early this near, but climbed up to 3% a week ago.


S&P 500 FINANCIALS INDEX had a dreary day, sinking to a new low. The previous low close was not in Nov as I said in the prior post, instead Jan 20 at 108.

Value 106.39

Change -11.59

% Change -9.8%

Another big financial, now a bank, American Express (AXP), a Dow stock, fell to a 12 year low, taking it below 14, on larger than expected credit card defaults. AXP, never known as a yield stock, now yields over 5%.

•American Express Falls Most in Two Months as Credit-Card Defaults Worsen

American Express --- 29 years





The Alerian MLP Index fell 7.27 taking it under 200 to 197.91. After getting used to 200 as a floor, now it has become the ceiling again. Sudden weakness after such strength all year as a bad sign. The Dow Jones REIT Index drooped 8 to 103½, heading for the sub 100 low set last Nov. Junk bonds after their nice recent rally, sold off today. VIX popped 5 to the 47s on all this negative news coming out.

Oil continued weak closing near 35, another low for this contract (down 80% from its peak last summer)

CLH09.NYM

..Crude Oil Mar 09

...34.96 ... 3:12pm ET

2.55 (6.8%)

The drama in DC for the GM & Chrysler is only a dress rehearsal for the final showdown on Mar 31. Today's show will give Congress an idea about progress made in their attempt for a recovery. No actions are expected. GM needs another $5B from the program which they will get. The Bloomberg story below says that the administration won't rule out a controlled bankruptcy for the autos, although for the time being they should be allowed to play out this hand. Their future looks near hopeless given they are trying to turn around a failing business in an economy that is sputtering (at best).

•General Motors, Chrysler Bankruptcies Can't Be Ruled Out, Obama Aide Says


Dow managed to close (7552) just above the 7½K low set in Nov. That's close. The S&P 500 closed at 789, 800 was considered an important psychological floor. If the massive gov spending package can't excite the markets, it's hard to figure what will!