Stocks fell on Wednesday after President Barack Obama warned of stricter oversight for Wall Street, raising the specter of greater regulation that investors fear could sap profits.
Obama’s comments near the market close rattled investors when he said financial institutions that pose a serious risk to markets should be subject to serious government supervision.
“Whenever there is a question about how large the government role will be … the market doesn’t like that,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
“As we came close to the bell we got the curveball: our president came on TV,” he said.
Trade was choppy on Wednesday, with stocks buffeted by uncertainty over Washington’s plan to shore up the banking system and weak housing sales. The market had turned briefly positive after the government gave details on stress tests of banks’ capital levels, with investors betting that banks would be able to withstand the news tests with relative ease, before finally falling in late trade.
The Dow Jones industrial average (DJI:^DJI – News) was down 80.05 points, or 1.09 percent, at 7,270.89. The Standard & Poor’s 500 Index (^SPX – News) was down 8.24 points, or 1.07 percent, at 764.90. The Nasdaq Composite Index (Nasdaq:^IXIC – News) was down 16.40 points, or 1.14 percent, at 1,425.43.
And how many more days of this is the market supposed to take? Once again, cast your minds back to 2000-2001, when Democratic leaders were accusing George W. Bush of “talking down the economy.” Isn’t that what the Obama Administration is plainly doing?