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Market takes dive despite Obama inauguration

Barack Obama's inaugural speech may have been the most anticipated in decades, still the stock market plummeted Tuesday on grim financial news.

Some presidents, such as George H.W. Bush and Bill Clinton, got a boost from the stock market the first day they were sworn into office. But investors Tuesday looked at the state of the nation - financial woes chief among them - and failed to give Obama a positive finish to the day.

"Talk doesn't mean anything until they change interest rates, change tax rates and do something meaningful," said Andrew Spieler, a Hofstra University finance professor. "If he had said, 'Hey, starting tomorrow, health care for everyone,' that would have an effect."

The blue-chip Dow Jones industrial average yesterday fell 4 percent, a dive of 332.13 points to 7,949.09, the biggest Inauguration Day drop in the Dow's 112-year history.

The broader Standard & Poor's 500 dropped 5.28 percent, closing at 805.22 Tuesday. The tech-heavy Nasdaq plunged 5.78 percent, or 88.47 points, to close at 1,440.86.

"It's a horrible way to start," said Don Selkin, chief investment strategist at National Securities Corp., investment bankers in Manhattan. "I was hoping for a little better."

But as Obama in his inaugural speech called for "hope over fear" and fortitude in meeting the economic challenge, financial institutions gave more ground yesterday.

Shares of State Street Corp., the largest money manager for institutional investors, tumbled nearly 50 percent, after bond losses almost doubled. Two big banks - Wells Fargo & Co. and Bank of America - were both down double digit percentages, after analysts said the banks will need to take more steps to shore up faltering capital.

David Wyss, an economist at Standard & Poor's Corp., said investors usually pay little attention to inaugural addresses.

"Mostly what you notice during an inauguration speech is a lot of trading going on," Wyss said, noting that little news is made during such speeches.

News, whether good or bad, has been a much bigger force on Wall Street than inaugural speeches.

Elections can raise or sink stock activity because sometimes, the outcome is uncertain, political and economic experts said. State of the Union addresses can also have an impact because that's when the president often delivers some details on policy and budget, they said. Prime time addresses by a president can also cause market fluctuations, depending the details given.

Investors have treated Democratic and Republican presidents about equally on Inauguration Day, but market results on the first day of any administration have little to do with the outcome for the rest of the year.

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