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Dow Drops 680 Points Amid Recession Confirmation

December 1st, 2008
By JOE GANDELMAN, Editor-In-Chief

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The Dow Jones industrial average plunged 680 points today as a report confirmed that the United States is in a recession and a key manufacturing index fell to a 26-year low.

CNN reports:

Stocks got hammered Monday, as investors bailed out on confirmation that the U.S. is in a recession and indications that it’s likely to continue for some time.

Treasury prices rallied, lowering the corresponding yields. Oil and gold prices plunged. The dollar tumbled versus the yen and gained against the euro.

The Dow Jones industrial average (INDU) lost 680 points, its fourth-biggest single-session decline on a point basis ever, according to early tallies. The decline was 7.7% in percentage terms, the 12th worst percentage one-day decline ever.

The Standard & Poor’s 500 (SPX) index fell 8.9% and the Nasdaq composite (COMP) gave up 9%.

Stocks slid throughout the morning as investors eyed a report showing manufacturing in the United States has slumped. But the selling accelerated in the afternoon after an official declaration of the recession - and dour comments from government officials.

Additionally, the market was primed for a selloff after last week’s run, analysts said. After hitting multi-year lows a little over a week ago, the S&P 500 rallied 19% through last Friday, while the Dow and Nasdaq both gained just under 17%.

“We’re going to continue to see this extreme volatility because there’s no clear end in sight to all the crises,” said Dean Barber, president at Barber Financial Group.

In a report released Monday, the National Bureau of Economic Research confirmed what many have long believed - that the nation is in a recession. According to the NBER, the official body that calls economic cycles, the U.S. has been in a recession since December 2007.

Speaking in the afternoon, Federal Reserve Chairman Ben Bernanke said that the economic weakness will continue for some time, despite the impact of the government’s efforts to get money flowing again.

Treasury Secretary Henry Paulson, speaking at a Fortune 500 forum in the afternoon, said the downturn was significant. He also said that the federal government is looking to expand the financial rescue program.

…The Institute for Supply Management said its November manufacturing index fell to a 26-year low of 36.2 from 38.9 in October. That was worse than what economists were expecting, according to a survey from Briefing.com.

The economy see saw has provoked one of the sillier spectacles in American politics — if that is actually possible in light of the silliness mega-trend in 21st century American political partisan rhetoric.

Partisans on BOTH sides are now attributing upturns to their side and downturns to the other. Sean Hannity and Rush Limbaugh point to stock market tumbles as signs of an “Obama recession” –even though President-Elect Barack Obama has not been in power for one second yet. And, strangely, they remain silent if the stock market goes up — not attributing any gain to the supposed powers Obama had in making it go down when it went down.

Similarly, some Democratic sympathizers and Obama supporters point to stock market gains as proof that Obama is reassuring the markets, but have no proclamation when the markets go down.

The reality: right now one President is in power and one President-Elect isn’t. The reality: a slew of factors are contributing to the stock market’s rises and falls and they have to do with poor decisions on the part of key actors in various segments of the economy and government. The reality: the economy has worsened while one administration has been in charge for 8 years. The reality: the opposition party got control of Congress two years ago but the party controlling the White House had it most of the other 8 years.

The reality: the see-saw continues…and there is enough bipartisan blame to go around.



This entry was posted on Monday, December 1st, 2008 at 4:43 pm and is filed under Barack Obama, Financial Crisis, George W. Bush, Economy, 2008 Elections, Politics. You can leave a response, or trackback from your own site.

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    (Recession _admission_, now that the election results are evident and problems with the financial institutions cannot be concealed)
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    Yes, they are just admitting what all America has known for months, though Bush is now blaming Wall Street, and not his inability to respond to multiple warnings from economists about the looming foreclosure crisis. The truth is that there was ample warning. but the administration caved in to banking lobbyists who did not want any regulations on issuing risky loans. Just more evidence that market forces alone do not suffice in an atmosphere of avarice and greed. The banks and automakers were well-aware that we couldn't allow them to face the consequences of their disasterous decision-making.

    How sad that consumer rights were circumvented during the last 8 years in favor of corporate interests!
 
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