Stocks plunge over Obama and Bernanke

Global stocks plunged Friday amid concerns about US President Barack Obama’s sweeping bank reform, with doubts about Federal Reserve chairman Ben Bernanke’s future also roiling markets.


The US stock market suffered a big selloff for the third consecutive day on economic worries that intensified after Obama on Thursday unveiled proposals to limit the size and scope of US financial institutions.

The Dow Jones Industrial Average slumped 216.90 points (2.09 percent) to 10,172.98, its second day of losses over 200 points and its biggest weekly drop since February 2009.

The blue-chip Dow has lost about five percent in the past three days of the holiday-shortened week.

The Nasdaq composite tumbled 60.14 points (2.67 percent) to 2,205.29 and the Standard & Poor’s 500 index dropped 24.72 points (2.21 percent) to 1,091.76.

“A late-day sell-off, led by concerns that Fed chairman Bernanke might not be reconfirmed, left markets sharply lower for the third consecutive session,” said Sara Kline of Moody’s

Obama plans to limit ‘excessive’ risks – markets slump

Obama outlined a tough financial reform program Thursday that would limit “excessive” risk-taking blamed for the financial crisis that drove the world’s biggest economy into its worst recession in decades.

“The president might be on the right warpath to soothe the American public, yet the market is telling him to be careful about using regulatory weapons of mass destruction,” said Patrick O’Hare of

“What we see in front of us is a market that doesn’t like the idea of excessive regulation since excessive regulation curtails earnings potential,” he said.

In Europe, London’s benchmark FTSE 100 index dropped 0.60 percent, while the Paris CAC 40 fell 1.07 percent and the Frankfurt DAX slipped 0.90 percent.

The Tokyo stock market closed down 2.56 percent, Sydney shed 1.59 percent and Hong Kong recovered from early heavy losses to finish 0.65 percent lower.

Asian and European markets had followed the lead of Wall Street’s rout Thursday, when the blue-chip Dow slumped 2.01 percent in its worst fall of the year.

Opposition to Bernanke worrying markets

News of growing opposition to the renomination of Federal Reserve chairman Ben Bernanke in afternoon trading further weighed on the US market as agitated investors contemplated another major element of uncertainty about the direction of the world’s largest economy.

Obama backs Bernanke for another term at the helm of the central bank, but critics say the Fed chief should have done more to avert the financial crisis that triggered the country’s worst recession in decades.

“The president has a great deal of confidence in what chairman Bernanke did to bring our economy back from the brink,” deputy White House spokesman Bill Burton said, as more lawmakers of Obama’s Democratic party announced their opposition.

Bernanke’s term ends January 31 and the Senate has not yet set a date for the vote.

“If he is not reappointed I think the markets would have a fit. Already we have seen that in the markets… what has happened in the last couple of hours is related to the events around Bernanke,” said Nariman Behravesh, chief economist at IHS Global Insight.

But much of the spotlight was directed at Obama’s proposals to limit risky banking practices, which require congressional approval.

“Risks has its pitfalls but it also has its reward,” said Douglas McIntyre at 24/7WallS上海按摩,m.

“The by-products of those reward include the creation of shareholder value, the creation of jobs in the financial sector, and capital that can be put into emerging American companies. Obama does not have an answer about how those things would be replaced if his proposals become laws,” he added.

Tough week for markets

Obama’s words capped a tough week for markets, which also have taken a hit from fears that China’s moves to tighten credit to cool its red-hot economy would slow momentum in the fragile global recovery from recession.

In other markets Friday, the dollar took a beating as Obama’s tough bank reform plans heightened fears about recovery in the sector and the overall economy and Bernanke’s future was thrown into question.