The stock market today was volatile, as the major indexes rebounded from huge intraday losses towards the end of the day on news of mortgage payment subsidies from the government. The Dow Jones Industrial Average ended the day down 6.77 points (-.09), much higher than its lows of over 200 points earlier in the day. The S&P 500 ended up 1.45 points (.17%) as well.
Stocks were propelled higher towards the end of the trading day, as Reuters reported that the government is planning on subsidizing troubled homeowners’ mortgage payments. The plan, which has not officially been announced yet, will lower mortgage rates for borrowers on the brink of foreclosure. This news was received very well by investors, because mortgage subsidies will allow people to spend less on their home mortgage payments and will allow them to spend more on other products and services. The logical link is that with more spending on products and services by the American people, companies’ profits will increase and businesses will grow.
Another bright spot today came from the retail sector, as the Commerce Department announced that January retail sales increased 1%, the largest increase in 14 months. This January increase comes after a horrible December, in which the retail sector experienced a 2.7% decline in sales.
Oil prices also fell to their lowest level in 2009, as prices fell to $33.98 a barrel. This is usually good news for investors that don’t have money in oil companies, as consumers have more money to spend on other products when oil and gas prices are lower.
Tomorrow, the House of Representatives will vote on the $790 billion economic stimulus plan, and the Senate is expected to follow either later tomorrow or over the weekend. If the bill doesn’t get passed, considering the fact that almost everyone is expecting it to get through Congress, the markets will most likely make a sharp downturn.
Until tomorrow,
Niki Pezeshki
College Trillionaire
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