Finance Globe

U.S. financial and economic topics from several finance writers.
2 minutes reading time (325 words)

Stock Market Closes Down For the Week on Friday

The continuing slide on Wall Street reflects growing concerns that Obama's $787 billion stimulus package, a $75 billion foreclosure prevention plan, and up to $2 trillion to stabilizing banks and to support lending just won't be enough to stop the downward economic spiral.

The Dow Jones Industrial Average slumped on Friday, closing at a six-year low as investors weighed rumors that Bank of America and Citibank could end up becoming nationalized. The Dow has been beaten down by the housing crisis, the banking crisis, and the ongoing recession and has lost 48% since its peak at 14,164 in November 2007.

American Bankers Association Presdient and CEO Edward L. Yingling said that "speculation of further government involvement is inhibiting private capital investment and unnecessarily eroding consumer confidence in our nation’s banking system. We believe that the whole discussion about nationalization is impairing the financial sector and making the credit situation worse."

Yingling said that there are more than 8,400 banks in this country, and that the "overwhelming majority of them are well-managed and well-capitalized." He said, "They are strongly positioned to weather this economic storm." He said that bank shares will continue to do poorly as "investors remain on the sidelines if there is continued speculation that the government may step in and undercut their investment."

Meanwhile, investors flocked to the safety of gold, driving it to an eleven-month high of over $1000 an ounce. Investors tend to look to precious metals during times of severe economic distress. Government bond prices rose sharply too, as bonds also tend to provide more safety when the stock market is in free-fall.

The markets turned around to recover some of the losses from earlier in the day after White House press secretary Robert Gibbs reiterated that the Obama administration "continues to strongly believe that a privately-held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government."

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Thursday, 02 February 2023

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