As the week progressed, US financial markets movement followed the similar pattern as expected outcome of the bailout plan. The last two trading days of this week has shifted the entire market focus on the finalization of the government proposed bailout plan. Any positive comment or statement regarding bailout, pushed the markets in green and any negative or concern took the markets in red.
Markets closed with impressive triple digit gains as on Thursday, for Dow 197 point at 11022 comes out as 1.8% gain, all the major indexes up by more than a percent, like' S&P 500 and NASDAQ increased by 1.97% and 1.43% respectively. As the markets moving with the ups and downs of big bailout plan, the uptrend has based on the President Bush warning about the impending doom in U.S. if the plan doesn't receive Congressional approval. As the day started with the expectations on positive and conclusive result of the White house meeting between President Bush, Lawmakers, congressional leaders and the presidential candidates, but in the end of the day the meeting concluded without any results.
The plan, sent to Congress by the Bush administration, calls for the federal government to buy as much as $700 billion worth of mortgage assets held by banks, Wall Street firms and other financial institutions. As the government try to build the favorable general opinion on the bailout plan, but this goes little awry, as with warnings and the pressure clearly states that this is the only alternative that the government have in the short term. Remember, the opinion here consist of the political, government, influential or institutional bigwigs only, and in no means this deal represent the opinion of the general public.
On Friday morning, again the markets have shown signs of caution when the opening bell sounded, as it speculates that the $700-billion bailout proposal might have been headed for the scrap. Adding to the situation was news that the second-quarter Gross Domestic Product (GDP) was downwardly revised to 2.8% annualized from the original estimate of 3.3%. However, as the day progressed and Congress indicates to get a deal done, bailout crazy market was poised to start the final hour in positive territory.
By the end of Friday, not of the much changes, As the Democrat says Congress will not authorize the huge $700 billion expenditure at once, instead it will authorized in phases. Now final agreement on proposed bailout expects an outcome this weekend or next week, if the US House decided to carry forward this session further to next week.
Its really a big issue to debate that the quick plan made by the government has not given any time to evaluate its implication, as there lays a lot of loopholes that affect unfavorably in medium to long term, and in the short term, no doubt this deal is a all in one steroid dose that stabilize the financial system in this crisis, may be for a very short period only. As some people say' President Bush, on his way out the White House door, was asking them to sign off on a $700 billion bailout built on taxpayer dollars, with very few questions allowed.
