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Record US stock fall greets Obama
Dow drops four per cent to record worst Inauguration Day showing.
Last Modified: 21 Jan 2009 05:54 GMT
The Dow has fallen on three-quarters of Inauguration Days but Tuesday's showing was its worst [EPA]

Wall Street has greeted Barack Obama's presidency with a record Inauguration Day plunge as fears deepened over the banking crisis.

Financial stocks, many of them falling by double digit percentages, led a huge drop in US stock prices on Tuesday that left the major indices down by more than four per cent.

Asian stocks also fell shortly after opening on Wednesday.

Traders on the floor of the New York Stock Exchange paused to watch the inauguration ceremony and hear Obama warn that the economic recovery would be difficult and that the nation must choose "hope over fear, unity of purpose over conflict and discord" to overcome the worst economic crisis since the Great Depression.

But his soaring rhetoric of hope did not boost investors' confidence in struggling banks.

Multibillion losses reported last week by Bank of America and Citigroup were followed by the Royal Bank of Scotland's (RBS) forecast that its losses for 2008 could top $41.3bn.

RBS dropped 69 per cent in New York trading while Bank of America lost 29 per cent and Citigroup fell 20 per cent on Tuesday.

'Watchful eye'

Obama also indicated that Wall Street would see greater oversight.

"Without a watchful eye, the market can spin out of control," he said in his address outside the Capitol.

The Dow Jones industrial average fell 332.13, or 4.01 per cent, to 7,949.09, its lowest close since November 20, when the blue chips ended at 7,552.29 - their lowest point in more than five years.

While the Dow has fallen on about three-quarters of all Inauguration Days in the US, Tuesday's showing was its worst ever.

Broader stock indicators also fell sharply, with the Standard & Poor's 500 index falling 5.28 per cent and the Nasdaq composite losing 5.78 per cent.

Richard Cripps, the chief market strategist for Stifel Nicolaus, said the market's decline was interrupted by Obama's inauguration speech but that the markets then continued to trade on the problems in the financial sector.

"There's just tremendous fear and uncertainty in the banking sector," he said.

Source:
Agencies
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