Market Recap - January 14, 2009

What a horrible day for the stock market!  Every index was deep in the red today, as the Dow Jones fell 248.42 (-2.94%) and the S&P 500 dropped 29.17 (-3.35%). 

Stocks fell as investors have started to realize that getting out of this recession is going to take a lot longer than we once thought, and things might actually get a lot worse before they get better.  The catalyst for the huge drop-off in the market was the horrible retail numbers that were released by the government today.  The government report said that retail sales dropped 2.7% in December, more than double the 1.2% expected decline by many analysts.  The decline in sales can be attributed to rising unemployment, drops in home prices, and tougher credit standards.

At the end of 2008, when the market was starting to show positive signs of life, many people thought we were done with the high volatility and had gotten past the extreme lows that we saw in November.  But, after multiple days of consistent sell-offs, there is renewed fear that the recession is not close to being over and that we have no clue when the end will be. 

The Federal Reserve is beginning to show some concern for the health of the economy as well, as Fed Chairman Ben Bernanke said today that more capital injections might be needed to spur more lending and to stabilize the financial markets. 

The biggest news after the market closed came from Steve Jobs, the CEO of Apple.  Jobs, who has been battling health problems for a while now, said that he is taking medical leave until June! This is terrible news for Apple’s stock price, as Jobs is so connected to Apple’s identity. Without him in charge, investors will certainly not be as confident that good things will happen at Apple. I wrote about how disastrous this would be for Apple in my Stock of the Day article a few days ago, and it is definitely looking grim for Apple now.  In after-hours trading, the stock plunged 7 percent, and you can expect the stock to plunge even deeper tomorrow.

Wearing my seatbelt,

 

Niki Pezeshki

College Trillionaire