Legal Commentary

Dow Jones Hit Worst Low Since 2002

By Jeralyn

What's changed since the Stimulus bill came along? Stocks have sunk even lower. The Dow Jones Industrial Average today sank to a level not seen since October, 2002.

Worst of all, analysts say today's drop means it's going to go even lower. [More...]

The measure’s slump below its Nov. 20 low to the worst level since October 2002 means it will keep falling, according to a 19th-century analysis known as Dow Theory. Its adherents say that losses in the average worsen when the Dow reaches a low at the same time as the Dow Jones Transportation Average, which happened today and yesterday.

Concern the deepening global recession will force the U.S. government to take over banks sent the Dow to its worst weekly decline since October. The rout left the Standard & Poor’s 500 Index, the benchmark for U.S. stocks, within 2.3 percent of the worst level since 1997.

Sen. Chris Dodd says we may have to nationalize banks for a short period.

More here:

Wall Street has been sinking lower and lower as investors come to terms with the fact that the optimism that fed a late-2008 rally was clearly unfounded. Companies' forecasts for this year, which accompanied a dismal series of fourth-quarter earnings reports, pounded home the fact that no one can figure out when the recession will end.

"It was a market that was built on that hope and what we're seeing now is an unwinding of that," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research in Cincinnati, of the rally from late November to early January.

Full post as published by TalkLeft on February 20, 2009 (boomark / email).