Market Conditions Void Till Bailout Legislation Releasedby Tim Manni
Further proof that markets are fueled solely by speculation was again proved today as stocks rose on hopes that lawmakers were close to approving a widespread bailout, despite this morning’s negative economic reports. President Bush’s speech last evening combined with U.S. Representative Paul Kanjorski comments to CNBC this morning fueled a rise in the Dow Jones, Nasdaq, and S&P.
Last evening in a prime-time television address, President Bush warned Americans that “our entire economy is in danger” from current market conditions. Bush spoke against criticisms of the bailout, and attempted to assure the people that his plan, which leaves Americans footing a $700 billion bill, was “designed to protect taxpayers.” Following Bush’s prepared statements from last evening, Rep. Kanjorski (D-PA) said, “I’m more optimistic this morning than I’ve ever been.” Kanjorski went on to report that the Senate’s version of the bailout is nearly completed.
Words rather actions continue to dictate the flow stocks. For the second time this year, General Electric announced they will trim their annual profit forecast from $2.20-$2.30 to $1.95-$2.10 a share. The world’s fourth largest company by market value also plans on temporarily eliminating its stock buyback because of unpredictable market conditions.
Even the sales of new single-family homes sinking to its lowest level in more than 17 years could not drag drown stocks as they remained hinged on the result of the bailout decision. Whether the plan will accomplish the goals it has set out for itself, it’s currently serving to hold stocks in a healthy place.