Wall Street- The Week Ahead

It should be an interesting week.

High anxiety on Wall Street won't subside this week as the deepening credit crunch pushes the global economy into recession, and corporate profits increasingly become an afterthought as investors scramble to raise enough cash to weather the credit crisis.

On the heels of a panic-riddled sell-off that caused the Dow industrials and the S&P 500 to plummet for eight days in a row, finance ministers and central bankers from the Group of Seven met on Friday -- followed by meetings of the Group of 20, International Monetary Fund, World Bank officials and European leaders over the weekend -- to discuss jammed credit markets and the staggering global economy.

While corporate earnings season gets into full swing this week, results will likely be on the back burner as investors struggle to see through the fog of fear that has engulfed the market.

Dow Finishes Below 10,000

This isn't good.

Wall Street joined in a worldwide cascade of despair Monday over the financial crisis, driving the Dow Jones industrials to their biggest loss ever during a trading day. Even a big afternoon rally failed to keep the Dow from its first close below 10,000 since 2004.

The sell-off came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.

At its worst point, the Dow was down more than 800 points, an intraday record. The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points at 9,955.50.

Stocks Fall After Bush Announcement

Wall Street didn't take kindly to the economic stimulus plan announced earlier today.

Wall Street resumed its downward trek Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's stimulus plan.

Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.

"It's disappointed in the size of the economic growth package. Wall Street's showing its displeasure," said Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh. "Honestly, I think the institutional investors understand the limits to the government's ability to enact economic change."

The Dow Jones industrial average, up more than 180 points in morning trading, was down 85.11, or 0.70 percent, at 12,074.10. The Dow plunged 306 points Thursday amid deepening pessimism about the economy.

The broader Standard & Poor's 500 index fell 15.40, or 1.16 percent, to 1,317.85, while the technology-focused Nasdaq composite index fell 10.38, or 0.44 percent, to 2,336.52.

Economy Ties War as Top Voter Concern

This from the AP:

The faltering economy has caught the Iraq war as people's top worry, a national poll suggests, with the rapid turnabout already showing up on the presidential campaign trail and in maneuvering between President Bush and Congress.

Twenty percent named the economy as the foremost problem in an Associated Press-Ipsos poll released Friday, virtually tying the 21 percent who cited the war. In October, the last time the survey posed the open-ended question about the country's top issue, the war came out on top by a 2-1 majority.

About equal proportions of Republicans, Democrats and independents in the new poll said the economy was their major worry, suggesting the issue looms as a potent one in both parties' presidential contests. It was also cited evenly across all levels of income, underscoring the variety of economic problems the country faces.

Amid increasing trade, job, housing, stock market and gasoline price woes, candidates from each party have started talking about how they would bolster the economy. The issue looms as the dominant one in the next presidential contest: Tuesday's Republican primary in Michigan, which had a 7.4 percent unemployment rate in November that is the nation's worst.

Wall Street Looks Ahead to 2008

It appears that Wall Street is nervous about the upcoming year.

As 2007 comes to a close, Wall Street is almost as jittery as it was over the summer, when worries about the housing slump and banks' losing bets on mortgages first came to a head.

Investors know more now about how much exposure financial institutions have to bad loans — quite a lot — but they remain uncertain about how the credit crisis of 2007 will hurt the economy in 2008. Market participants will be paying close attention to this week's economic data, particularly the monthly report on employment, seen as the most important factor in preventing housing woes from crippling consumers.

Last week, the Dow Jones industrial average ended 0.63 percent lower, the Standard & Poor's 500 index finished down 0.40 percent, and the Nasdaq composite index fell 0.65 percent.

The three major indexes will finish the year with gains, barring any extraordinary drops Monday, but problems with credit, housing and the financial sector are likely to keep Wall Street nervous at least early on in 2008.

It's been a dismal fourth quarter for the stock market, and the "Santa Claus rally" Wall Street often launches at the end of every year failed to gain steam. The Dow has fallen 3.8 percent since the end of September, when many investors were driving the blue-chip index toward record heights and betting that the worst of the credit crunch was over.