Mar 30, 2009 0 Comment
For the time being it seems that stocks are responding well to Geithner’s plan to rid banks of toxic assets. The Dow Jones Industrials are up nearly 500 points, a strong indication that not only is morale about the state of the economy on the rise, but the actual economy may be beginning to legitimately heal itself. Furthermore, a surprising report was released that home sales are beginning to increase.
Let’s take a look at the numbers more closely to gain a better understanding of where this optimism regarding the financial crisis is coming from. According to the Washington Post, companies like J.P. Morgan Chase and Bank of America climbed more than 18 percent, while Boeing and General Motors also displayed unexpected growth. The S&P 500’s 7.1% rise is the fourth largest daily advance since the 1930’s, adding to the glimmer of positivity that has been shining since Geithner’s announcement a few weeks ago.
Things are not only looking up here in America in terms of the stock market’s response to Washington’s plan to get the economy back on track; several Asian stock indexes also rose 3% or more. Malaysia’s main index rose 2.5%, Philippine shares went up 2.5%, Indonesian shares climbed 3.4% and Thailand’s SET added 2%. The positive effects seem to be spreading throughout the world in the past few weeks. Though the climbs in these stock markets are only the beginning of what needs to continue, these positive changes in response to Washington’s policies are steps in the right direction.
So what does this positive movement in the stock market mean for everyday Americans? First, let’s take a look at your 401K. As a result of the financial crisis, average Americans lost anywhere from 20 to 40% of their 401K. When stocks are recovering, this inspires confidence that recovery of these funds in the future is possible. With housing sales beginning to increase, this means that in selected areas, the bottom may have been reached for falling home values. Perhaps we are beginning to see the positive effects of Obama’s housing plan, as everyday Americans are beginning to get access to much-needed loans again.