The Dow Industrials index dropped to 82.5 points, incurring losses of 5.2 percent as investors wait for details of President Barack Obama’s economic recovery bill which includes measures to help distressed homeowners avoid foreclosures. The 5.2 loss of Dow Industrials was its lowest since November 2008.
The $787 billion economic recovery plan was approved by the House and Senate. It is expected that Obama will sign the bill in Denver, Colorado, one of his stops for his road trip to gain support for his stimulus bill. The president is also expected to outline his plans to help homeowners who are facing the threat of foreclosures during his speech in Arizona as part of his road trip.
However, some investors claimed that Obama’s economic stimulus package is just too big. Others considered the economic stimulus program as not sufficient to prevent the increase in the number of distressed properties. Some investors, who were already disappointed over the financial bailout plan unveiled by Treasury Secretary Timothy Geithner, refused to get their hopes up over the foreclosure prevention program.
The stock market took a beating when Geithner failed to provide more details about how he would proceed with his plan to assess the financial condition of banks and, with the assistance of private sector, eliminate their problematic assets.
Avalon Partners Inc. economist Peter Cardillo explained that investors will adopt a wait-and-see attitude until such time that the Obama Administration has clarified its foreclosure prevention plan.
Meanwhile, the consumer sentiment index of the University of Michigan took a drastic dropped in February 2009.
The 500 stock index of Standard and Poor’s dropped by 1 percent or 8.35 points to 826.84, while Nasdaq composite index lost 0.5 percent or 7.35 points to 1,534.36.
Also, the Russell 2,000 stock index of smaller businesses reacted to the lack of details over Obama’s economic recovery plan by dropping 0.5 percent.
The investors’ doubt over the administration’s effort to reduce the number of foreclosed homes reflected on the drop in the dollar’s value against other major currencies.
More evidence of investors’ hesitancy to get their hopes up on the administration’s foreclosure prevention program were reflected on further decline of stock prices, with Standard and Poor’s dropping by 4.8 percent, Nasdaq by 3.6 percent and Russell 2000 by 4.7 percent.
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