Stocks dropped on Wall Street Thursday following poor job reports and general market malaise around the globe. The Dow Jones performed the worst by far, dropping 0.51 percent (53.13 points) by the closing bell. The S&P (0.21 percent, 2.30 points) and NASDAQ (0.08 percent, 1.68 points) each fell to a lesser extent.
The drop from yesterday is expected to continue today despite strong numbers in overseas trading.
According to CNNMoney.com, domestic stocks will struggle with worse-than-expected figures from AIG weighed against improving GDP growth from the fourth quarter of last year. With global momentum heading up American investors may be able to ride the wave, but there are some things pulling back on U.S. activity.
Foremost among these downward forces is the revelation of nearly $9 billion in quarterly losses by insurance giant American International Group.
According to Reuters, the bailed out insurance firm lost $8.9 billion to end 2009. The United States government has already pumped nearly $200 billion into the firm since taking it over at the height of the financial maelstrom. Unlike the other Wall Street firms, which were able to rebuild profitability very quickly, AIG’s problems are far more entrenched.
Another weight pulling on investing is news that consumer confidence showed signs of weakness in February. According to Reuters, consumers have taken a more gloomy outlook on their own financial stability and prospects for the future. The fear of being laid off, while ever present, was not a huge factor in dropping sentiments.
In the face of this string of bad news, there is something to be cheerful about at week’s end.
According to CNNMoney.com, the economy grew at a 5.9 percent annual pace in the last quarter of 2009. After sinking deeper into contraction during the Bush administration, the economy has expanded slightly during the past several months. Much of this can be accounted for by simply following the natural market cycle, but some is tied to the stimulus incentives doled out by the Obama administration and Democratic Congress.
It should still be noted that an expansion of GDP is merely a signal of the economy getting larger. It is not a signal of the economy getting “better” either for individuals or as a whole.