Stock investors see threats from all directions
Written By: TIM PARADIS
The threats seem to be coming from all directions.
Jittery stock traders react to each day’s news as if it could be the start of Financial Crisis 2.0. On Thursday, the Standard & Poor’s 500 index suffered its biggest one-day drop in more than nine months because of worries about debt problems in Greece, Portugal and Spain. Concerns about China’s plans to limit economic growth and proposed regulatory bank changes from Washington also have pummeled the market.
The fears aren’t as intense as in 2008, when the S&P 500 fell 38.5 percent. But January was the worst month for the market since it began its recovery last March. And the S&P 500 has fallen 7.3 percent from the high of 1,150.23 it reached Jan. 19.
It’s not as if something devastating has happened, either in Europe, where economies have been struggling for some time, or in Washington. It was expected that the Obama administration would try to restrict big banks. What’s different now is that investors have much more to lose than they did a year ago, so they sell at the first whiff of a problem. Even with its recent losses, the S&P 500 is still up 58 percent since hitting bottom March 9.
Investors are linking financial problems in Europe with the U.S. economic recovery. Some worry that governments’ debt problems will spread in the same way that bad mortgages in the U.S. took down economies here and abroad in 2008.
“They are shell-shocked because they’ve seen a similar movie before and they didn’t like the ending,” said Anthony Chan, chief economist at J.P. Morgan Private Wealth Management. “They’re wondering whether this is the sequel or not.”
Chan said investors are probably overreacting to the problems in Europe. But, he said, they are more demanding about what they want to see from the world’s economies.
“The market is going not going to be allayed by signs of recovery, they’re going to be looking for signs of sustainability,” Chan said.
Geithner Says U.S. Will ‘Never’ Lose Its Aaa Debt Rating
Written By: Rebecca Christie
Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.
“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast today whether a downgrade is a concern. “That will never happen to this country.”
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