A New Nadir
It was a tough day on Wall Street, hitting the lowest point in five and a half years.
You’ll recall a couple of weeks ago I posted this:
It was, of course, premature. The S&P500 from one year ago as of today:
What happened today? From the WSJ:
Banks, brokers and insurance companies, all big holders of these bonds, bore the brunt of the selling, falling more than 10% overall. Citigroup Inc. lost nearly a quarter of its value, dropping to $6.40 a share in its biggest one-day percentage decline ever, and adding to the woes of the bank and its chief executive officer, Vikram Pandit. Citigroup shares last hit this price on May 2, 1995.
Some of the steep price declines can be traced to last week’s decision by the Treasury to scrap its plan to purchase troubled assets from financial institutions. That effectively pulled the rug out from under parts of the mortgage market, because investors had expected the plan to help support the values of securities tied to commercial mortgages and home loans.
We have a long road to recovery ahead of us.
