While it's not great news, it's also not unexpected. The excessive exuberance at the end of the year never felt real and it ignored what everyone knew, which is that Q4 would be a disaster and that the banks were no better off despite a fairly period of calm. The two issues - Q4 corporate earnings and bank problems - are deeply connected and the last thing that banks need is even more trouble with outstanding loans. When the corporate world falls, they cut jobs.
When jobs are lost the banks fall deeper. Breaking out of this cycle will be the challenge for Obama and it's unlikely that the cycle can be broken any time soon. As the earnings continue, more cuts will be announced (as has happened again today). Rewind. Repeat.
Wall Street ushered in the Barack Obama presidency with a record Inauguration Day slide Tuesday amid fresh signs the global bank crisis was far from over.
An index of bank stocks lost 19.7 percent on fears of more losses. The Dow Jones industrial average fell 332.13 points, or 4.01 percent, to end unofficially at 7,949.09. The S&P 500 Index slid 44.90 points, or 5.28 percent, to finish unofficially at 805.22.
The Nasdaq Composite Index tumbled 88.47 points, or 5.78 percent, to close unofficially at 1,440.86.
