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Dow Jones Responds to Obamanomics
By John L. Rothra | March 4, 2009 | Commentary
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One Year Chart: Dow Jones drops 477.33 points on November 5, 2008, the day after Obama is elected President. (Click for larger image)
There are two major ways the average person measures the economy: (1) the amount of money in their bank accounts and retirement funds and (2) the value of the stock market, especially the Dow Jones Industrial Average. As the Dow Jones goes, so does the retirement fund since nearly all of them are invested in the stock market. President Barack Obama promised to strengthen the economy, bring an era of prosperity, and change the economic outlook. It has only been a few short weeks since taking office, but so far the stock market does not like Obama’s economic plans. They seem to believe Obamanomics will hurt the nation financially and economically, not help it.
Six Month Chart: Dow Jones drops 477.33 points on November 5, 2008, the day after Obama is elected President. (Click for larger image)
I will illustrate this by showing the Dow Jones’ changes and prominent events in Obama’s presidency. The first two charts–one year and six month–show that despite his high rhetoric and bold promises, the market dropped the day after he was elected. On November 5, 2008, the stock market plummeted 477.33 points. This initiated about a two month free fall until just before his inauguration. But Obama wasn’t done inspiring Wall Street and killing our 401(k)’s.
Three Month Chart: Dow Jones drops 330.54 (Jan. 20), 380.48 (Feb. 10), 293.03 (Feb. 17), and 78.69 (Feb. 25) points in response to events related to Obama's presidency. (Click for larger image)
On January 20, 2009, Obama became President of the United States when he took the oath of office. Since this event took place earlier in the day, the market was able to respond not only to the inauguration, but also to Obama’s speech. What did they think? Chart three shows the Dow Jones over the last three months. Notice also four critical events are marked showing when they occurred and how investors responded: Inauguration (January 20), Obama’s first press conference (February 9), Obama’s stimulus package passed by Congress (February 13), and Obama’s address to Congress (February 24). Because of when the events took place, the market responded to the last three on the first business day following the event. Here’s the response on those days:
- January 20, 2009 – Dow Jones drops 330.54 points
- February 10, 2009 – Dow Jones drops 380.48 points (Tuesday after press conference)
- February 17, 2009 – Dow Jones drops 293.03 points (Tuesday after stimulus passed, Monday was a holiday)
- February 25, 2009 – Dow Jones drops 78.69 points (Wednesday after Congressional speech)
As you can see, the market consistently dropped each time. Looks like investors are unsure of or even fear Obamanomics. Don’t worry, though, Obama wasn’t done wrecking your retirement and future hopes.
One Month Chart: Dow Jones drops 380.48 (Feb. 10), 293.03 (Feb. 17), 78.69 (Feb. 25), and 86.98 (Feb. 26) points. (Click for larger image)
Chart four shows the stock market over the last month along with four major Obama administration events over that time period: his first press conference (February 9), Congress passing his stimulus package (February 13), his address to Congress (February 24), and the day the Obama budget was released (February 26). Notice that not a single event was welcomed by the stock market, causing it to tumble further. The day he announced his budget, the stock market dropped 86.98 points (the first three are mentioned above).
Before you reach for the Prozac, let’s examine a little history. On October 9, 2007, the market closed at its all-time high of 14,164.53. Over the next year, the market remained over 10,000 (most of the time over 11,000), not dropping below five digits until one month before Obama was elected.
On March 3, 2009, the Dow Jones closed at 6,726.02, continuing its drop and, despite his claims, Obamanomics (or at least his plans) have contributed to the evaporation of your retirement accounts. Looking at it in perspective, the Dow Jones is:
- Down 7,438.51 (or 52.5%) since its all-time high
- Down 2,899.21 (or 30.1%) since Obama’s election
- Down 1,223.07 (or 15.4%) since Obama’s inauguration
But there is good news to consider in all this while you down your Tums. In 2010, Republicans have the opportunity to retake Congress and overturn the socialist, stock market destroying policies. Two years later, in 2012, Republicans can recapture the White House and reduce all the taxes Obama, Nancy Pelosi, and Harry Reid raised. The campaign to restore fiscal responsibility (Obama spending trillions upon trillions that we don’t have doesn’t qualify, no matter what he says) begins today!
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