Obama comments scare investors into sell off; Dow down 216 points
Investors took news of the Obama administration’s comments on a proposal to increase government regulation of the big banks, limiting the types of trading these banks can do with their money. Financials took a big dip as shares of Bank of America fell 97 cents to $15.52, while Citigroup lost 19 cents to $3.27 and JPMorgan fell $2.59 to close at $40.81. Reports showing a rise in jobless claims and a drop in manufacturing activity added to the market drops as well.
The proposed Obama plan on banks would limit the ability of commercial banks to make risky trades and stop these institutions from making investments or owning hedge funds. It would basically separate these banks from commercial and investment entities. The first thing to come to mind for investors is uncertainty as the new proposals would limit the amount banks can trade and lend which cuts into profits.
Goldman Sachs $4.9 billion dollar Q4 revenue which translated to an increase in $8.20 a share was not enough for its stock to close on a high. It slid 4% by the end of the bell.
Unemployment claims jumped last week, as 36,000 more claims were filled, raising the total from 446,000 to 482,000.
The Dow made its biggest drop since Oct 30, 2009 as it fell 216.52 points to close at 10,386.63; it dropped 88 more points from yesterday’s close.
The S&P 500 fell 21.77 to 1,116.27 and the technology heavy NASDAQ fell 25.55 to 2,265.70. Total volume traded Thursday was 676.1 million shares, while the Russell 2000 index of smaller companies fell 7.95, or 1.2 percent, to 631.66.
Gold continued to fall, losing $9.40 to settle at $1,103.20 an ounce as oil fell $1.66 to $76.08 a barrel.
In Europe, Britain’s FTSE 100 fell 1.6 percent, Germany’s DAX index lost 1.8 percent, and France’s CAC-40 fell 1.7 percent. Japan’s resilient Nikkei stock rose 1.2 percent to close at 10,868.41.