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Tilted Cat Head
Administrator
Location: Manhattan, NY
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What does DOW below 7,000 mean to you?
Quote:
View: Dow Below 7,000 for the First Time Since 1997
Source: Nytimes
posted with the TFP thread generator
Dow Below 7,000 for the First Time Since 1997
March 3, 2009
Dow Below 7,000 for the First Time Since 1997
By DAVID JOLLY and BETTINA WASSENER
The Dow Jones industrial average continued is decline Monday, falling below 7,000 for first time since October 1997.
Shares declined on renewed concern about financial institutions, including the insurance giant, American International Group, and the banking giant, Citigroup. The government on Monday morning agreed to provide another $30 billion to A.I.G., which also reported a $61.7 billion loss. On Friday, Washington took a larger stake in Citigroup.
After about an hour, the Dow was down 154 points or 2.2 percent, while the Standard & Poor’s 500-stock index declined 2.4 percent, but remained about the 700 mark. The Nasdaq fell 1.8 percent.
Bank shares continued to lead the decline with Bank of America down 12.1 percent, Citigroup down 5.3 percent and JPMorgan Chase 4.3 percent. The S.&P. financial sector was down 4.6 percent overall. The industrial sector had fallen 3.8 percent.
Shares of A.I.G. were 14.9 percent higher on the strength of the latest government assistance.
Crude oil was down $3.74, to $41.02 in New York trading.
Wall Street followed both Europe and Asia lower. In afternoon trading, the Dow Jones Euro Stoxx 50 index, a barometer of euro zone blue chips, slid 3.4 percent, while the FTSE 100 index in London dropped 3.9 percent. The CAC 40 in Paris fell 3.3 percent and the DAX in Frankfurt fell 2.6 percent.
The Tokyo benchmark Nikkei 225 stock average fell 3.8 percent, while the S&P/ASX 200 in Sydney shed 2.8 percent. The Hang Seng index in Hong Kong dropped 3.9 percent.
Financial institutions were again the big losers. BNP Paribas fell 8.5 percent, Royal Bank of Scotland fell 11.6 percent and UBS fell 8 percent in Europe, while Mitsubishi UFJ fell 6.9 percent and Mizuho Financial Group 3.7 percent in Tokyo after the American government moved to take a larger stake in the ailing banking giant Citigroup and the Treasury and Federal Reserve said they would give an additional $30 billion in taxpayer money to A.I.G.
HSBC Holdings, the global British bank, fell 20 percent after saying it would seek to raise nearly $18 billion in new capital from shareholders and shut down its American consumer lending business.
“It’s pretty despondent everywhere,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “O.K., there are signs that some of the leading indicators have stabilized to some extent, but it’s at a very, very low level, and we’re not seeing corporate investment picking up, or consumers starting to spend again — in other words, the traditional mechanisms by which economies come out of a recession are absent at this time.”
Economic data and company earnings in recent weeks have eroded hopes that a gradual recovery would start to materialize during the second half of the year. If, as seems increasingly likely, a tangible recovery will not come until 2010 at the earliest, Mr. Evans said, “that means corporate earnings will remain extremely soft for quite some time.”
“And that in turn means it’s pretty clear that there is more value to be had in safe havens like bonds than in equities,” he added.
Economic data from Europe added to the dismal atmosphere in the market. The Markit euro zone manufacturing purchasing managers’ index sank in February to a record low of 33.5 from 34.4 in January.
On Monday, the Japan Automobile Dealers Association said in a statement that auto sales in February declined 32.4 percent, the seventh consecutive monthly decline.
Japan last week reported that exports in January declined by nearly half from a year ago, while South Korea on Monday released data for February — the first in the region to issue data for that month — showing a 17 percent plunge in exports.
Data released Friday showed gross domestic product in the United States fell at an annualized rate of 6.2 percent during the fourth quarter of 2008, the steepest decline since the 1982 recession, suggesting a deeper downturn that will in turn further challenge the battered financial system.
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To me it means very little, since it isn't real money. It's just as fake as the rest of the money that people used to leverage businesses and lifestyles.
I have had friends make claims to me like, "I've lost $50,000 in the market!" I ask them the simple question, "Did you sell your holdings?" The response is always, "No, but the value of them... it dropped like a rock!"
Well yes, that's true, but until you've actually sold your stocks, you've not made or lost any money. Until you've converted it into money, it is just a marker like any bet.
When the dot com bubble burst driving the first wave of DOW pushing upwards and the economists and government all wanted to suspend the cycle, I wasn't a fan of their finagling.
What does this signal to you? Does it mean anything to you?
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