RM Howard

It should not be surprising that with little in the way of positive economic news issuing from Washington that the mood on Wall Street remains decidedly black. The pessimism of many investors is just a sign that there is little trust in the promises coming out of the nation’s capitol.

As a result, stock market continues to jump up and down throughout each session. Investors of every ilk and caliber wobble between genuine worries about the state of the nation’s economy at large while retaining a measure of hope for the financial sector. It has become a predictable pattern on Wall Street to see rapid bursts of optimism followed quickly by deep fears about the economic condition of the United States.

All of the major players in the markets, from Dow Jones and S&P 500 to NASDAQ have all been experiencing steady drops during daily trading sessions. The markets remain volatile. The Dow and the S&P 500 both fell more than 24% so far this year. In fact, the Dow recently reached its lowest level since the spring of 1997; the S&P 500 is at its lowest point since September 1996. The NASDAQ experienced a six-year low.

Yet, not all the news was dark. It seems that financial stocks remained the lone exception in a market climate characterized by decline by maintaining gains achieved early on even as other industries faltered.

According to news report, Bank of America could be set to raise significant capital in the private sector. This item has become a rallying point for many other financial institutions. It comes despite the fact that the shares of major institutions have suffered a beating that has left them at record lows. The underlying fear is that the banks will not have enough money to deal with future losses, furthering the possibility that more banks will fold despite government intervention.

Following the precedent set by JPMorgan Chase and Wells Fargo, Capital One Financial Corp. became the latest bank to eliminate its dividend. Representatives of the lender stated that a 87% reduction in the dividend, to about 5 cents should be expected in order to conserve available capital.

Parallel concerns about the state of US automakers continue to influence many investors and also the lack of lenders providing auto loans is a real problem. The status of GM and Chrysler are still be decided as members of President Obama’s auto task force work to develop a rescue plan that accounts for all the relevant factors.

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