Market Recap - January 20, 2009

So much for an Obama rally.  While some people thought that the national optimism stemming from Obama’s inauguration would have a positive impact on the market, stocks actually took a complete nosedive today.  Today’s drop made for the worst inauguration day in the Dow’s history.  The Dow Jones fell 332.13 (-4.01%) and ended below the 8,000 level, and both the S&P 500 and the Nasdaq dropped over 5%.

Financial stocks were the worst performing stocks of the day, as many of them fell by double-digit percentages.  One of the reasons for their poor performance was the continuing worry about the health of Bank of America (BAC) and Citigroup (C), but also because the Royal Bank of Scotland (RBS) forecasted that its losses for 2008 could top $41.3 billion (its stock plummeted 69% as a result).   

The markets and the U.S. economy continue to look worse by the day, and Obama definitely has a lot of work ahead of him.  There really is no indication of a market bottom right now or any time in the near future, and the overwhelmingly poor performance by the banking industry is cause for more concern.  The fact that the U.S. Government is thinking about nationalizing Citigroup and the British Government is also thinking about nationalizing a few banks, such as RBS, truly scares me.  Let’s hope Obama’s bailout plans go through Congress quickly and are implemented as soon as possible. 

Until tomorrow,

 

Niki Pezeshki

College Trillionaire