Traders Optimistic About Proposed U.S. Bank Rescue and Economy Stimulus Programs
During a week which presented one wave of bad news after the other, Wall Street rallied and ended up with the Dow Jones industrial average closing on Friday at 8,280.59, the Nasdaq composite index at 1,591.71 and the S&P500 index at 868.60, reflecting increases of 2.7 percent, 2.94 percent and 2.69 percent respectively. The general consensus is that the increase which took place despite all the negativity in the market can be mainly attributed to optimism on behalf of stock market traders with regard to a bank rescue program to be unveiled by Treasury Secretary Timothy Geithner this week, possibly as early as Monday.
The bad news received last week included the latest government report on the number of jobs lost in January – a staggering 598,000 – causing the official U.S. unemployment rate to climb to 7.6 percent. More than 3.6 million U.S. citizens have lost their jobs since the beginning of 2008 and the report released on Friday revealed that as many as 2.6 million people have been out of work for more than six months, the highest long-term unemployed figure recorded since 1983.
It is this increasing level of unemployment that the Obama-administration is attempting to address by means of its proposed economic stimulus package which has as one of its goals the creation of between 1.3 million and 3.9 million jobs by the end of 2010. But, while everyone agrees that job creation is necessary, there is much dissention as to how the government should go about creating jobs and assisting the unemployed, and it would seem that the proposed stimulus package still has a rocky road to travel before it is approved by the Senate.Many experts in the field are of the opinion that until the banking sector is back on track and has earned the trust of the American public, the U.S. economy is going to continue to suffer. With this in mind, stock market traders will be turning their attention to the new bank rescue program which is likely to detail plans to shore up the banking system, as well as slow down the current pace of mortgage foreclosures, the latter being the measure that will most benefit the many average Americans who are losing their homes. A sound bank rescue program may very well extend the recent gains experienced by the U.S. stock market, which will provide embattled investors with some relief.