Market Recap - February 2, 2009

There was no major news today on the markets, but the underlying gloomy mood of investors caused stocks to decline moderately. The biggest stories of the day came early, as reports of manufacturing activity came out for January and Macy’s announced a large set of layoffs. Additionally, talk from Washington over Obama’s massive economic stimulus package is still ongoing.

The Institute for Supply Management said today that manufacturing activity fell in January, making it the twelfth straight month that the institute has reported a drop. Manufacturing activity hit an all time low during the middle of the month, but has increased since then.

Announcements of layoffs and cutbacks in spending were all too prevalent in January, and February did not start off with an exception to the trend. Macy’s Inc. (M) said today that it would be cutting 7,000 jobs, or 4% of its workforce. The company will also be cutting its dividend from 13.25 cents to 5 cents at the time of the next dividend declaration. The announcement was yet another harsh reminder to investors that retail is suffering as a result of decreased consumer spending.

Obama’s $819 billion stimulus package bill passed in the House of Representatives last week, despite not getting a single vote of support from Republicans. The stimulus package will be under debate in the Senate throughout this week and possibly the next. Senate Republicans argue that the bill contains too much waste and that the package will not cause speedy financial stimulus. Senators are trying to counterbalance the necessity for a quick passage with deliberation that will eliminate waste in the bill. This will truly be a difficult task, as the Senate bill is already estimated to contain over $900 billion in plans. That is a lot of money for anyone to manage efficiently and quickly.

Until tomorrow,

 

Matt Schwartz

College Trillionaire