Wall Street Cautious In Weak EconomyIn the first full trading week of 2009, Wall Street wiped out half of the gains it made during the holiday trading period, as investors play it cautiously on continuing economic indicators pointing to declines in all areas of the economy.
Last Friday's jobs report, along with poor retail sales numbers, profit warnings or job cuts announced by Wal-Mart, Alcoa and others, brought the market indexes down. This week begins the quarterly reports from Alcoa, Intel and Merrill Lynch.
Monday's futures indicated a lower opening with the S & P 500 down 1.90 percent, Dow Jones industrials set to open 8 percent lower and Nasdaq up slightly at .50 percent before opening.
Smith Barney For Sale; Rubin To Retire From Citigroup
Citigroup's senior counselor, Robert Rubin, says he will retire from the company after it lost more than $20 billion over the past year. Rubin, a former Treasury secretary, has been with Citi for nearly a decade. He will retire immediately as senior counselor and will not stand for re-election as director at the company's next annual meeting.
In other news about Citigroup, the banking giant is in talks to merge its brokerage arm, Smith Barney, with Morgan Stanley's brokerage operations. In the deal, Morgan Stanley would make a payment to Citi for an undisclosed sum for 51 percent stake in the bank's asset management division. The deal is to be structured as a joint venture, but Morgan Stanley would be able to increase its stake in the next five years, eventually assuming control of Smith Barney. The result would be a network of brokers of about 20,000.
Citi received a rescue package from Treasury in November as it wobbled under losses from $300 billion in troubled assets. A total of $45 billion has been invested so far by Treasury. Citi's shares have lost more than 75 percent of their value in the last year.
Employers Expected to Continue Job Cuts Into 2009
The jobs cuts seen in 2008, with a total of more than 2.5 million jobs slashed, are expected to continue into 2009, as big declines in payrolls and higher unemployment in the first quarter. The unemployment rate is now at 7.2 percent -- the highest in nearly 16 years, reports the Labor Department.
Pressure is increasing on President-elect Barack Obama to stop the job cuts. Obama, who takes office on January 20, called for lawmakers last week to pass his economic recovery plan in the next few weeks and warns if nothing is done this recession could linger for years.
His plan calls for saving or creating 3 million jobs with a price tag that could go as high as $775 billion. Congress has mixed views on the plan.
No area of the economy was spared last month, as job losses came in manufacturing, construction, retail and temporary-help employment agencies. Businesses also reduced employees' work hours, and economists point to this as a bellwether for further job declines.