April 17, 2009 4:00 PM
- Text
Stocks Wobble As Obama Shares Housing Plan
(CBS/AP)
Investors took scant comfort Wednesday from the government's plans to revive the housing market and overall economy.
Wall Street ended with only modest changes after a steep sell-off Tuesday on worries about the global economy and banks in Eastern Europe. Several moderate rallies unraveled Wednesday as market indicators hovered around the lows they marked in November.
Investors reacted coolly to a $75 billion mortgage relief plan President Barack Obama introduced on Wednesday, which would provide incentives to mortgage lenders to help borrowers reduce their payments.
Plunging home values are at the center of the 14-month-old recession, which has been one of the most severe in decades. The announcement came a day after Obama signed into law a $787 billion economic stimulus plan.
"First of all, we have to address the housing market and the more plans that are needed and the more plans that are announced - this is all part of the process," said Steven Goldman, chief market strategist, Weeden & Co., in Greenwich, Conn. He said it will take time for investors to determine whether the plans are working and that the lingering unknowns will lead to more volatility in the stock market.
According to prelminary calculations, the Dow Jones industrial average edged up 3.03, or 0.04 percent, to 7,555.63. For a second day, the blue chips managed to finish just above their November closing low.
Broader stock indicators slipped. The Standard & Poor's 500 index fell 0.75, or 0.10 percent, to 788.42, and the Nasdaq composite index fell 2.69, or 0.18 percent, to 1,467.97.
The Russell 2000 index of smaller companies fell 5.72, or 1.33 percent, to 423.18.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange. Trading volume came to a light 1.43 billion shares compared with 1.61 billion shares traded Tuesday.
"You're looking at a crescendo, if you will, of uncertainty," said Richard E. Cripps, chief market strategist for Stifel Nicolaus. "We're still in that period where more information needs to come out."
When asked on The Early Show if the bad economic news can get worse, Mark Zandi, chief economist at Moody's economy.com, said, "Oh, yeah, sure. Obviously it can get worse. It's important to realize that policymakers are working hard here. We have a stimulus plan, it isn't perfect, [but] it's a reasonably good plan. We're getting a foreclosure mitigation plan that will help address the foreclosure problem, a plan to help the banking system - the financial stability plan that was unveiled last week and more details over the next few weeks.
"With policymakers acting aggressively, we'll see the fruits of that effort as we make our way through the year. Sure it can get worse, but the fact that the policymakers are working really hard is a reason for some optimism."
But is there a light on the horizon, asked Early Show anchor Harry Smith?
"Not in the very near-term," Zandi said. "No matter what policymakers do, it isn't going to take effect until later this summer, later this year. We need to buckle in for the next three to six months. It will be difficult."
Wall Street ended with only modest changes after a steep sell-off Tuesday on worries about the global economy and banks in Eastern Europe. Several moderate rallies unraveled Wednesday as market indicators hovered around the lows they marked in November.
Investors reacted coolly to a $75 billion mortgage relief plan President Barack Obama introduced on Wednesday, which would provide incentives to mortgage lenders to help borrowers reduce their payments.
Plunging home values are at the center of the 14-month-old recession, which has been one of the most severe in decades. The announcement came a day after Obama signed into law a $787 billion economic stimulus plan.
"First of all, we have to address the housing market and the more plans that are needed and the more plans that are announced - this is all part of the process," said Steven Goldman, chief market strategist, Weeden & Co., in Greenwich, Conn. He said it will take time for investors to determine whether the plans are working and that the lingering unknowns will lead to more volatility in the stock market.
According to prelminary calculations, the Dow Jones industrial average edged up 3.03, or 0.04 percent, to 7,555.63. For a second day, the blue chips managed to finish just above their November closing low.
Broader stock indicators slipped. The Standard & Poor's 500 index fell 0.75, or 0.10 percent, to 788.42, and the Nasdaq composite index fell 2.69, or 0.18 percent, to 1,467.97.
The Russell 2000 index of smaller companies fell 5.72, or 1.33 percent, to 423.18.
Declining issues outnumbered advancers by about 5 to 2 on the New York Stock Exchange. Trading volume came to a light 1.43 billion shares compared with 1.61 billion shares traded Tuesday.
"You're looking at a crescendo, if you will, of uncertainty," said Richard E. Cripps, chief market strategist for Stifel Nicolaus. "We're still in that period where more information needs to come out."
When asked on The Early Show if the bad economic news can get worse, Mark Zandi, chief economist at Moody's economy.com, said, "Oh, yeah, sure. Obviously it can get worse. It's important to realize that policymakers are working hard here. We have a stimulus plan, it isn't perfect, [but] it's a reasonably good plan. We're getting a foreclosure mitigation plan that will help address the foreclosure problem, a plan to help the banking system - the financial stability plan that was unveiled last week and more details over the next few weeks.
"With policymakers acting aggressively, we'll see the fruits of that effort as we make our way through the year. Sure it can get worse, but the fact that the policymakers are working really hard is a reason for some optimism."
But is there a light on the horizon, asked Early Show anchor Harry Smith?
"Not in the very near-term," Zandi said. "No matter what policymakers do, it isn't going to take effect until later this summer, later this year. We need to buckle in for the next three to six months. It will be difficult."
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