New York : Wall Street plunged more than four percent on Inauguration Day Tuesday as bank woes spread while investors failed to find confidence from President Barack Obama’s inauguration speech.
The Dow Jones Industrial Average was down more than 330 points, or four percent, falling below 8,000 for the first time in 2009, while the Standard & Poor’s 500 and the Nasdaq indexes dropped more than five percent.
Shares of major US banks plummeted after the State Street, the world’s biggest money manager for institutions, lost half their value after the company reported rising unrealized losses in its commercial paper program and investment portfolio.
Shares of State Street plunged to their lowest levels in more than a decade as the company said it may need to raise more capital.
The Royal Bank of Scotland reported that it would see a loss of $41.3 billion for 2008. The British government announced a second bailout plan for banks, which echoed the deals the US government reached recently with Citigroup and Bank of America.
J.P. Morgan Chase & Co shares fell 20.73 percent after Fox-Pitt analysts cut the bank’s earnings outlook. Citigroup and Bank of America also fell 20 percent and 28.97 percent respectively.
Meanwhile, investors are uneasy with companies’ earnings reports. Health care products maker Johnson & Johnson reported a 14 percent increase in the fourth-quarter profit, beating the market’s forecasts. But it also warned of weaker results in 2009.
The decline in stocks accelerated after hearing the new president’s inaugural address as investors could not find confidence from Obama’s speech on economic policy.
The Dow Jones fell 332.13, or 4.01 percent, to 7949.09. The Standard & Poor’s 500 index dipped 44.90, or 5.28 percent, to 805. 22 and the Nasdaq dropped 88.47, or 5.78 percent, to 1440.86.