Market Recap - March 4, 2009

After 5 consecutive days of selling, investors finally pushed the markets substantially higher today! The Dow Jones Industrial average increased 149.82 points (2.23%) and the S&P 500 was also up 16.54 points (2.38%)

A major piece of news that boosted the markets came from Washington, as Obama’s foreclosure prevention program went into effect today.  The program’s official name is the Homeowner Affordability and Stability Plan, and it will provide $75 billion to help around 9 million struggling homeowners avoid foreclosure.  The government will use the money to help homeowners refinance into lower interest rates and will also use the money to give incentives to lenders to restructure mortgages to more affordable levels.  As a result of this plan, the government is hoping to decrease the number of foreclosures and to help ease homeowner worries.

The markets were also up on news that China is ramping up its economic stimulus plan.  China will spend billions on infrastructure in order to boost consumer spending and to create jobs.  As a result of the increased government spending, oil and other commodity prices soared due to expectations of higher demand. 

But, then again, maybe the markets went up today strictly because stocks can’t go down forever.  At some point, there are going to be investors who think that the markets have just been too oversold and feel like some stocks are undervalued.  After five straight days of selling, and after reaching lows in the major indexes that have not been seen since the mid-1990s, the bargain hunters were out in full force today.

Until tomorrow,

 

Niki Pezeshki

College Trillionaire