Obama signed the economic stimulus plan Tuesday. The $787 billion package is one of the biggest public spending programs since World War II. Despite that, Wall Street has its doubts the stimulus and bank bailout programs can stop the global economic freefall. Investors hammered the Dow to within a fraction of a point of its lowest close in 5 1/2 years Tuesday. The market lost 3.8 percent, the S&P plunged 4.6 percent, and the Nasdaq sank 4.2 percent.
President Obama isn't resting, though, and will unveil Wednesday the next step of the recovery effort -- a $50 billion plan to help stem foreclosures. According to reports, the plan will likely offer government cash to mortgage companies that reduce interest rates for homeowners in danger of default. Update: the plan seems to be closer to $75 billion.
General Motors Corp. (GM) and Chrysler LLC barely managed to submit their recovery plans by the deadline that was part of their deal to receive $13.4 billion in government loans. It wasn't clear how they could plan a recovery given the state of the economy in general and the auto industry in particular. GM said it is cutting a total of 47,000 jobs globally and closing five more U.S. factories. It said it may need up to $30 billion, but asked for $9.1 $16.6 billion now. Chrysler said it will cut 3,000 more jobs and stop producing three vehicle models. Chrysler requested $5 billion in new loans. Also, the UAW reached a tentative agreement with the Big 3.
Overseas, world stock markets followed Wall Street's example and mostly fell again Wednesday. Indeed, fears the financial crisis is taking another turn for the worse as exposure to weaker markets such as Eastern Europe could affect financial institutions further, had investors fleeing to safe havens. Indeed, from bond yields, many emerging markets debts has already been downgraded, at least by bondholders.
Meanwhile, oil prices remained below $35 a barrel Wednesday after Tuesday's big drop, which was spurred by fears of deepening recession despite the stimulus bill and other plans to help the different sectors of the economy. Weekly crude inventories are due out today at 10:35 am.
With concerns over the solvency of General Motors (GM), Citigroup (C) and Bank of America (BAC), investors watch for the S&P to break 750. If that happens, some say, it would be a precursor for even more losses -- crash.
On the economic docket today, January building permits and housing starts will be released at 8:30 am Eastern. At the same time, January export and import prices are due out. At 9:15 am, January Capacity Utilization and Industrial Production will be reported. Most these indiactors are expected to show continued weakness. Update: U.S. housing starts plunged 17 percent, breaking yet another record.
At 2:00 pm, the Federal Reserve will release minutes from Jan. 27-28 FOMC meeting.
Also, Cleveland Fed President Pianalto will speak to developers at 9:00 am, Fed Chairman Ben Bernanke will speak on current economic conditions at the National Press Club in Washington at 12:30 pm, and Chicago Fed President Evans will speak on the economic outlook at 1:20 pm.
Stocks in the news: GM, CMCSA, DE, GT, A, VZ, GE, HPQ, WFMI ...
