NEW YORK – Barack Obama took office on Tuesday with the world’s banks free-falling and the auto industry gasping, and Wall Street greeted the new US president with its worst inauguration day ever.
Obama vowed to meet a host of challenges including war, sagging confidence and an economy he said was ‘badly weakened’ by ‘greed and irresponsibility,’ but investors were hoping for more, even with an US$825 billion stimulus plan and a second US$350 billion financial bailout in the works.
‘People were looking for something, new plans, new hopes’ said Joe Saluzzi, co-manager of trading at Themis Trading in Chatam, New Jersey. ‘They didn’t hear something new.’
Stock prices extended losses while Obama spoke, then continued to decline after he finished as investors were disappointed they did not hear more specifics about his promises for bold and swift action, considering the depth of the recession.
The Dow closed down four per cent, extending its 2009 slump to more than nine perccent. The S&P 500 sank 5,3 per cent, a record decline on an inauguration day.
‘It’s very uplifting (Obama’s inauguration) but I’m not sure it’s sufficient. I don’t really see this influencing medium-term investment decisions,’ said Marc Chandler, head of global currency strategy at Brown Brothers Harriman.
‘There still is a danger that we are doing too little rather than too much,’ he said in reference to the stimulus and financial rescue plans.
BANKS HIT AGAIN
Shares of State Street Corp, the world’s biggest institutional asset manager, plummeted 59 per cent after it reported billions of dollars of unrealised losses, while Citigroup, Bank of America, JPMorgan Chase and Wells Fargo all lost between 20 and 29 per cent.
Europe’s banking index fell to a 14-year low on fears that lenders will need more state help to raise capital.
Chrysler, a once mighty US car company, surrendered a 35 per cent stake to Italy’s Fiat for zero cash. France weighed plans for an emergency aid package for its own battered auto industry.
Obama said the country understood it was in the midst of crisis, mentioning war, a sagging confidence and an economy that was ‘badly weakened, a consequence of greed and irresponsibility on the part of some.’
‘Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time. But know this, America – they will be met,’ he said upon taking the oath.
Obama also hinted at greater regulation, saying ‘this crisis has reminded us that without a watchful eye, the market can spin out of control.’ – Nampa-Reuters
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