SMF NOTES For the past week investors have been fixated on Treasury's financial rescue plan, which was unveiled earlier today.
However, all of the enthusiasm and build up ahead of the plan quickly faded as market participants dumped stocks after Treasury Secretary Geithner released the plan's details (Dow -3.5%, Nasdaq -2.8%, S&P 500 -3.5%)...
Since the major themes of the plan had already been leaked, market participants were hoping Geithner would provide more specifics regarding the pillars of the plan...
One primary point of interest has been how Treasury will deal with the toxic assets that are diluting bank capital, but the Treasury indicated it is still exploring different structures for this program. The recognition that the plan has yet to be finalized came as a disappointment since it creates an impression that Geithner still doesn't have a solution...
Investors have also been keeping a close watch on the progress of the Senate's $838 billion stimulus bill. The bill was passed within the last hour, but is considered a more long-term approach to restoring economic conditions, so it hasn't received the same level of interest from investors as has been given to the financial rescue plan...
The bill passed as the Commerce Department reported wholesale inventories fell a more-than-expected 1.4% during December. The data marked the fourth straight monthly decline...
The mood among market participants remains dour. Approximately 95% of the companies in the S&P 500 are trading with losses... Corporate headlines have done little to buck the negative tone. General Motors (GM 2.80, -0.03), Fortress Investment (FIG 1.70, -0.14), and UBS (UBS 11.34, +0.30) announced they are cutting their workforces.
UBS also posted a loss that equaled more than $7 billion. Meanwhile, Boeing (BA 40.65, -2.15) revised its recent quarterly earnings downward, and Monsanto (MON 82.87, -0.79) reaffirmed its previous guidance...
Market participants will turn their attention toward Federal Reserve Chairman Ben Bernanke's testimony to the Financial Services Committee, which is expected to begin in just a few minutes.
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