Wall Street’s frigid Inauguration Day

What happened

As Barack Obama was sworn in as president, U.S. markets plummeted. The Dow Jones Industrial Average shed 4 percent, to 7,949—the index’s worst Inauguration Day on record—the S&P 500 dropped 5.3 percent, and the Nasdaq fell 5.8 percent. Bank stocks led the decline, prompted by a massive British bank bailout and worse-than-expected earnings at Boston-based State Street Corp. (Los Angeles Times)

What the commentators said

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Obama’s honeymoon? "Over,” said Andrew Leonard in the Chicago Sun-Times, “even before the sun had set on the first day” of his presidency. So, too, is the “euphoria” of “economy-watchers of a liberal persuasion.” With the bank crisis worsening, Tuesday’s drop was a clear reminder of the work Obama has ahead of him to “stop the global banking system from imploding.”

Still, “the day’s drop had little to do with it being Inauguration Day,” said Mark Hulbert in MarketWatch. The Dow has dropped on 19 of the 27 inaugurations since its inception in 1896. In fact, prior to today, the biggest drop was in 1981, on President Reagan’s first swearing-in. And a year later we started “a bull that didn’t stop for good until March 2000.”

“Correlation does not mean causation,” said Greg McNeilly in AOL’s Political Machine, “but it makes you wonder.” It sure looks likes “America’s job providers—those who invest capital to create employment—literally puked during the inauguration.” And surely one obvious explanation is that Wall Street fears “the prospect of 1,460 days of President Obama”

Or maybe it’s that “when George W. Bush left the White House,” said Robert Stein in The Moderate Voice, “he took Wall Street’s free-lunch order forms with him and the panic is on.” In his inaugural address, Obama pledged a return to regulation, which means that “the Henry Paulson billion-dollar giveaways would now be transformed with conditions, oversight, and transparency.”