Market Recap - March 9, 2009

Last week’s major sell-offs and occasional rallies made today’s market action seem weak, as investors gradually sold stocks. The Dow Jones industrial average fell 79.89, or 1.2%, while the S&P 500 fell 6.85, or 1%. Both indexes have dropped 25 percent this year alone.

The United Auto Workers (UAW) approved contract changes for Ford (F) today. The unions agreed to allow Ford to freeze wages and cut benefits for laid off workers in an effort to stay competitive amid harsh economic conditions. Ironically, Ford is the one American automaker that has not asked for government assistance. General Motors (GM) and privately owned Chrysler LLC have yet to make contractual changes with workers. If and when they do make changes, the Ford contract will serve as a model for alterations.

On an unusual note, the financial sector actually rallied today! Bank of America (BAC) gained 61 cents, or 19.43% while Wells Fargo (WFC) was up $1.36, or 15.80%. These gains come after the stocks were completely battered by nationalization fears in the past few weeks. Analysts don’t believe that today’s financial rallies can be attributed to any sort of fundamental change, as investors are probably scooping up the stocks while they’re down in hopes that long term returns will be made.

Pharmaceutical company Merck (MRK) announced today that it will be buying Schering-Plough (SGP) in a $41.1 billion deal. The acquisition will make Merck the second largest pharmaceutical company and help it expand its business while cutting costs. This deal comes several weeks after pharmaceutical giant Pfizer (PFE) announced a buyout of Wyeth. Increased pressure from the troubled economy and difficult healthcare regulations announced by President Barack Obama have led drug companies to come together to stay economically viable.

While stocks still lost today, it was good to see the markets act more tamely. Investors are tentatively buying and selling in hopes of discovering a bottom.

 

-Matt Schwartz

College Trillionaire