Wall Street Grand LLC, a leading Financial Newsletter is pleased to present market moving news to Wall Street Grand members and the investment community. Stocks sank Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations.
The three drops saw the biggest one-day point declines since late October. The DJIA (INDU) fell 213 points, or 2%. S&P 500 (SPX) dropped 21 points, or 1.9%. Nasdaq (COMP) lost 25 points, or 1.1%.
As some analysts predicted China's lending practices hit commodities and the broader market causing a slump day on Wall Street. Reports showing a rise in jobless claims and a drop in manufacturing activity added to the pressure, overshadowing Goldman Sachs' better-than-expected profit report.
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It didn’t help that the White House came out with negative economic news today "China is still lingering today and then the Obama announcement comes out and that's when you saw the selling really pick up," said Steven Goldman, market strategist at Weeden & Co.
With Obama calling for greater government regulation of the nation's biggest financial institutions, including limiting commercial banks ability to make high-risk trades and stopping them from owning or investing in hedge funds. If or when this comes about it would cause separate commercial and investment banks, a throwback to a Depression-era law that was basically thrown out a decade ago.
Big banks such as JPMorgan Chase (JPM, Fortune 500), Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) would be impacted in particular.
The plan appears to be along the same lines as the proposal from Paul Volcker, the former Fed president and current economic advisor who has called for even more restrictions on institutions after the Wall Street collapse.
Today American Express (AXP, Fortune 500) reported higher earnings that beat forecasts on flat revenue that also beat estimates. Shares of the financial services firm gained 2% in extended hours trading.
Also today Google (GOOG, Fortune 500) reported a big jump in revenue that topped estimates thanks to a rebound in the advertising market. Shares lost 4% in a "sell the news" reaction.
General Electric (GE, Fortune 500) and McDonald's (MCD, Fortune 500) are due to report tomorrow January 22, 2010.
Tickers were in the red across the board with 28 of 30 Dow stocks sliding, with IBM (IBM, Fortune 500), Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500, Coca-Cola (KO, Fortune 500) and the bank stocks leading the charge.
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