[Marxism] Wall Street Faces Worst Yearly Drop Since 1931

[Greg McDonald <sabocat59@xxxxxxx>]

HuffPo

Wall Street Faces Worst Yearly Drop Since 1931

JOE BEL BRUNO | December 28, 2008 07:47 PM EST | AP

NEW YORK — Investors are preparing to close out the last three  
trading days of 2008, a year in which Wall Street has logged its  
worst performance since Herbert Hoover was president.

The ongoing recession and global economic shock pummeled stocks this  
year, with the Dow Jones industrial average slumping 36.2 percent.  
That's the biggest drop since 1931 when the Great Depression sent  
stocks reeling 40.6 percent.

The Standard & Poor's 500 index is set to record the biggest drop  
since its creation in 1957. The index of America's biggest companies  
is down 40.9 percent for the year.

With these statistics ready to play out this week, it is little  
wonder why investors are all too happy to close the books on 2008.  
Analysts are already looking toward January as a crucial period for  
the market as it tries to recover some of the $7.3 trillion wiped  
from the Dow Jones Wilshire 5000 index, the broadest measure of U.S.  
stocks.

"It is hard to gauge a recovery because there's so many things out  
there that are interactive with each other," said Scott Fullman,  
director of derivatives investment strategy for WJB Capital Group in  
New York. "Nothing is in a vacuum. Anybody who is managing money has  
to be on the cautious side for at least the first six months of 2009."

He said many analysts are jumping past this week and focusing on next  
month, especially with Barack Obama set to be sworn in as president  
on Jan. 20. There is hope that the new administration will deliver  
another stimulus package, which along with December's interest rate  
cuts, might help quell the financial crisis.

Trading is expected to remain volatile with many market participants  
on the sidelines during the holiday-shortened week, but that doesn't  
mean investors won't be kept busy. With no Santa Claus rally last  
week, economic data slated for the coming days could sway the  
market's mood going into 2009.

Late Sunday, traders began to pull back slightly in early futures  
trading. Dow industrials futures fell 36 points, or 0.42 percent, to  
8,436. S&P 500 futures fell 3.40, or 0.39 percent, to 865.50, while  
Nasdaq-100 futures dropped 5.00, or 0.42 percent, to 1,183.50.

Investors will be awaiting details about how retailers fared in the  
post-Christmas sales period, especially since consumer spending  
drives more than two-thirds of the U.S. economy. The main question is  
if bargain prices at the malls will be enough to rescue retailers  
from a bleak holiday shopping season.

Meanwhile, another gauge of how Americans feel about spending money  
will be released on Tuesday. The Conference Board will issue its  
December index of consumer confidence, which is expected to rise to a  
reading of 45.2 for this month, up slightly from 44.9 in November.

The Labor Department will report on weekly jobless claims Wednesday,  
after a 26-year high of 586,000 initial filings in the week ended  
Dec. 20.

But the most anticipated economic data will be delivered Friday when  
investors get a fresh reading on the manufacturing sector. The  
Institute for Supply Management releases its December survey of  
purchasing managers.

The index is expected to show a reading of 35.5, down from November's  
36.2, according to economists polled by Thomson Reuters. A reading  
above 50 points to expansion, while a reading below 50 shows a  
contraction.

There is little in the way of corporate news slated. Though, the  
final week of the year _ when volume is slow and many money managers  
are on vacation _ is often a time when companies slip through lower  
quarterly forecasts.

Investors were still waiting word if GMAC Financial Services, the  
financing arm of General Motors Corp., will be eligible for a  
government bailout. GMAC received the Federal Reserve's approval to  
become a bank holding company last week, but that was contingent on  
putting into place a complicated debt-for-equity exchange by 11:59  
p.m. EST Friday.

That deadline passed with no word from the company. Analysts have  
speculated that if GMAC doesn't obtain financial help it would have  
to file for bankruptcy protection or shut down, which would be a  
serious blow to parent GM's own chances for survival.

Both General Motors and Chrysler LLC on Monday will receive the first  
part of the $13.4 billion in emergency loans from the government.  
Each will receive about $4 billion, then receive the second payment  
of $5.4 billion on Jan. 16. GM gets a third installment of $4 billion  
on Feb. 17.

Ford Motor Co. did not participate in the government rescue plan.

IndyMac Bank, one of the most high-profile financial institutions to  
fail because of the financial crisis, might be close to getting a new  
owner. The buyers include private equity firms J.C. Flowers & Co. and  
Dune Capital Management, according to The New York Times, which cited  
unidentified people close to the matter.

The proposed sale could be announced by Monday morning, the report said.

Meanwhile, Kuwait's government on Sunday scrapped a $17.4 billion  
joint venture with U.S. petrochemical giant Dow Chemical Co. after  
criticism from lawmakers that could have led to a political crisis in  
this small oil-rich state.

The Cabinet, in a statement carried by the state-owned Kuwait News  
Agency, said the venture, was "very risky" in light of the global  
financial crisis and low oil prices. Dow Chemical said it was  
"extremely disappointed" with the Kuwaiti government's decision and  
was evaluating its options under the joint-venture agreement.

<http://www.huffingtonpost.com/2008/12/28/wall-street-faces-worst- 
y_n_153816.html>
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