If you were to glance at the Drudge Report now, ("JOBS PLAN TANKS") you'd think President Obama's jobs speech had torpedoed U.S. stocks into the 300+ point free fall they're currently experiencing. While the president's jobs speech has coincided with precipitous declines in the Dow Jones Industrial Average (-2.89%) and the S&P (-2.78%), financial reports are attributing multiple factors to the dive. Here are the leading suspects:
The European Central Bank This morning, stocks began their downward drift following the resignation of Juergen Stark, the executive board member of the European Central Bank, amid discord over the organization's bond-buying program. CNN Money reports:
Investors were on edge following the surprise announcement of Stark's resignation. "Stark has been a fairly vocal critic over the ECB's bond purchasing program," said Michael Hewson, analyst at CMC Markets in London. "His resignation highlights the political paralysis at the heart of Europe, and the debt crisis is approaching a tipping point."
[...] "A big part of the European debt crisis has been the lack of coherent response from European officials," said Kathy Jones, fixed income strategist at Charles Schwab. "It always seems like they're behind the curve, with too little too late, and all the changes in leadership in the middle of a crisis increases the uncertainty."
Greek default The Wall Street Journal hangs the blame on Greece's worsening financial outlook and a potent new rumor circulating:
[There are] renewed fears that Greece may be forced to default on its debt. Rumors circulated about how Germany is planning to recapitalize its banks that would suffer from a Greece default.
"Germany is saying we're going to prepare if there is a default," said Peter Boockvar, managing director and equity strategist at Miller Tabak & Co. "Markets are betting and people are preparing that this could be an inevitability." Greece's government Friday denied that it had any plans to default over the weekend, dismissing such chatter as "rubbish."
Obama's speech As The New York Times explains it, the Wall Street sell off is less of a reaction to Obama's speech being interpreted as unwise or foolhardy, but more about the worry that it will have any chance of passing through Congress. Paul Ballew, chief economist at Nationwide, lays it out like this:
“Yesterday’s speech raises questions of whether there will be support for fiscal policy,” he said about the president’s jobs address. Mr. Obama’s plan focused on generating jobs and included a number of tax cuts and spending proposals, such as an extension and expansion of the cut in payroll taxes and a tax holiday for small businesses for hiring new employees. The president was to send a detailed proposal to Congress in a week.
Mr. Ballew said that questions persisted about how much of the proposal would pass.
The Financial Times adds that "a lack of detail" in Obama's jobs plan was also a "concern to many traders."