Stocks ended mixed on Thursday as the Dow Jones finished down 27.24 points (-.3%) and the S&P 500 edged slightly higher 3.08 points (+.3%).
The morning got off to a bad start, as the Dow sank 118 points in early trading, due to the release of December results by many retailers. Wal-Mart’s (WMT) numbers were particularly bleak, as the retail powerhouse said that its December same-store sales were worse than Wall Street expected and lowered its 4th quarter earnings expectations. Target (TGT) and Costco (COST) also announced that same-store sales fell about 4% in December.
But, as the day wore on, Citigroup (C) announced that it had reached an agreement with lawmakers on a plan that would allow bankruptcy judges to alter home loans in order to prevent foreclosures. This plan, which would be attached to Obama’s stimulus package, could potentially ease the foreclosure crisis that has been one of the biggest catalysts for the recession that we are currently experiencing. The announcement of this proposed deal led to an upswing in the market, as investors became hopeful that an end to the foreclosure crisis would bring our economy back to stability and prosperity.
Another source of optimism for investors in afternoon trading came from Obama’s announcement of some of the major details in his economic stimulus plan. His so-called “American Recovery and Reinvestment Plan” (ARRP), which will cost about $775 billion, will provide a $1,000 tax cut to 95% of working families and will create many new jobs across the country.
Bad news looms, though, with December unemployment figures set to come out tomorrow. Economists expect the numbers to show a decline of 545,000 jobs in December, but the number could potentially be much worse.
If the number is worse that 545,000 and the market still goes up, that is a sign that most investors are over the bad news and have a positive outlook on the economy. If the number is worse than 545,000 and that market gets crushed, it will prove that most investors are still wary about the state of the economy.
Niki Pezeshki
College Trillionaire
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