Today the Federal Reserve, the European Central Bank, the Bank of England, and the Swiss national bank announced they will lend an unlimited amount of funds to commercial banks in an effort to revive the financial markets worldwide. The Feds lead the way in the unprecedented event that backs the governments recent intervention.
In response to the central banking announcement the Dow rebounded with an advance of 936 points, the largest gain in 70 years. The gain marked a sign of confidence in our financial system. A single positive day does not prove a total revival coming in our market by any means, but investors have some hope in sight after an advance of this margin.
The week ahead will prove to make history yet again.
The week of September 29th felt much like a roller coaster ride. Last week we heard the proposed bailout plan from President Bush and Treasurer Paulson. Both Wall Street and Main Street expected the bailout to be passed on Monday. After going to the House, the bill failed to pass with a vote of 228 to 205. Confidence on Wall Street was immediately diminished resulting in a 778 point drop of the Dow Jones industrial average, the largest single point drop in history. Tuesday the market rebounded and regained some territory ending the day up 485 points.
The bill was sent back to the drawing board and was presented to the U.S. Senate on Wednesday. The modified bailout plan was approved by the Senate with a vote of 74-25. After passing through the Senate it was sent back to the House for review on Thursday and was eventually passed on Friday with a vote of 263-171. It was interesting, to say the least, to watch the political pressure between the Senate and the House. President Bush went on the sign the legislation and movement within the banking system is underway.
Next week will be an important week in the market. Confidence will continue to be volitile for some time, but now a sense of direction can be used to gague the near future.
For more details about the bailout plan please visit Forbes’ article, “The Bailout Plan: An Owner’s Manual”.
Today the Federal Reserve, the European Central Bank, the Bank of England, and the Swiss national bank announced they will lend an unlimited amount of funds to commercial banks in an effort to revive the financial markets worldwide. The Feds lead the way in the unprecedented event that backs the governments recent intervention.
