MARKET SNAPSHOT: Obama Needs Come-from-behind Win To Post Market Gains
January 20 2009 - 2:18PM
Dow Jones News
By Kate Gibson
With financial stocks dragging down equities Tuesday as George
W. Bush exited Washington, the market's declines were emblematic of
the fact that Barack Obama's new administration is starting from
behind, at least in terms of annualized stock-return
performance.
Bush's final week as president left the Dow Jones Wilshire 5000
Index -- as of Friday's close -- down 5.5% during his second term.
In combination with the 1% gain eked out during his first four
years, Bush leaves office with the stock market down 2.3% over
eight years.
The devaluation of the stock gauge gives Bush the dubious
distinction of being the first president of the past five to
oversee any decline at all, according to Wilshire Associates.
Ronald Reagan presided over a gain of 12.1% in his first term,
and then a climb of 16.1% during his second, translating into an
overall rise of 14.1% when he left office in 1989.
The downward trend persisted Tuesday, with the Dow Jones
Industrial Average (DJI) falling more than 200 points in early
afternoon trades. At last check, the Dow was off 168.21 points to
8,113.01, with 23 of its 30 components trading lower.
Financials were the heaviest weights on the blue-chip index.
Bank of America Corp. (BAC) dropped almost 17%, while Citigroup
Inc. (C) plummeted about 12%.
The broader S&P 500 Index (SPX) declined 25.31 points, or
3%, to 824.81, with financials again the greatest laggard, led by
State Street Corp. (STT) off 48%, PNC Financial Services Group
(PNC) off 32% and Bank of New York Mellon Corp. (BK) off 23%.
Shares of State Street dived on worries that the
financial-services firm might have to bring troubled investment
vehicles onto its balance sheet. .
The Nasdaq Composite Index (RIXF) shed 57.33 points, or 3.8%, to
1,472.
In his one and only term as president, George H. W. Bush
presided over a 14.5% advance in annualized returns on the DJ
Wilshire 5000.
Bill Clinton had the best results overall, at least in looking
at yearly returns from the broad market gauge. The Wilshire rose
17.7% during his first term, which ended in 1997.
Of course, Clinton fared less well, in both political and in
Wall Street terms, during his second term. Yet the index still
climbed 13.5% for a collective 15.6% during his eight years in the
Oval Office.
"When you look the previous administrations' stellar returns,
some people would say the extraordinary performance over 20-plus
years was the biggest bull market of our lifetimes, and valuations
are just coming back in line. Yet over 28 years, from the beginning
of Reagan to the end of Bush 43, it's a gain of about 9.5%. It
drives home the point, the sound advice to be a long-term
investor," said Bob Waid, vice president at Wilshire Associates
Inc.
"If you need to have cash within a five- to seven-year period or
are approaching retirement, it is better not to have large-risk
exposure, and equities are a risky asset class," he added.
The global equities market already is off to a less than solid
start for the year. January is showing "scary similarities to last
January," according to Howard Silverblatt, senior index analyst at
Standard & Poor's.
Last January posted one of the worst months up to that point,
with global markets declining 8.39% and losing $3.28 trillion.
For the first half of this month, according to Silverblatt, the
global market losses came to $1.23 trillion.
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