The inauguration of President Barack Obama, who is working on plans for an economic stimulus program estimated to be in the range of $800 billion, provided no reassurance to investors today, with the markets turning in their worst post-war performance ever for an Inauguration Day.
The Dow Jones Industrial Average was down 332.13 points, or 4.01 percent, and closing justbelow 8,000.
“Welcome to the White House, President Obama!” said an ABC blogger.
According an Associated Press report, the Dow typically falls when a president in inaugurated.
On the 2001 and 2005 inauguration days for George W. Bush, the Dow was down a fraction of a percent each time. The same for Bill Clinton in 1993 and 1994. Likewise for inaugurations for George H.W. Bush, Jimmy Carter, Gerald Ford, Richard Nixon, Lyndon Johnson, John F. Kennedy and Dwight Eisenhower, the report said.
Reagan had the next-worst drop, of 2.77 percent in 1985 and 2.09 percent in 1981, the report said.
Bank stocks plummeted today, with the Standard and Poors Financial index dropping 16.7 percent.
Investors fear the likelihood of government action to clean up and restructure the companies,
the Financial Times said.
“Investors are deeply concerned that the U.S. government might follow the lead of the UK and come in with a rescue package that hurts shareholders by wiping out companies’ shares,” one senior banker told the Times.
The Miami Herald said the combination of tax cuts, public-works projects and other spending plans probably would cost $825 billion.
The report quoted economists saying the best opportunity for the plan to work would be if the government would halt its extra spending when the economy starts responding.
“Things in the government sector just don’t shrink,” University of South Florida economist Don Bellante told the newspaper. “The contractors who get the jobs want to keep getting them. Congress will be responsive to these people. These are people important to them in keeping their own jobs.”
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