Obama’s assumption, the stock market falls while dollar increases

The stock market continued to decline irrespective of the inauguration ceremony that marked the change of the state power. While the stock indexes show large drops in the stocks of banking institutions other sources inform that the inauguration impacted the dollar rate. On Tuesday financial stocks led a huge fall on Wall Street.

Dow Jones news service reported that the drop in the Dow reflected the worst Inauguration Day performance in the history of the industrial average. Multibillion-dollar losses reported last week by Bank of America Corp. and Citigroup Inc. along with The Royal Bank of Scotland’s forecast that its losses for 2008 could top $41.3 billion added up to the concerns and fears of the market which resulted in immediate collapse. State Street Corp. plunged 59%, Citigroup fell 20% and Bank of America lost 29%. The Royal Bank of Scotland dropped 69% in New York trading. The Dow Jones industrial average fell 332.13, or 4.01 percent, to 7,949.09, its lowest close since Nov. 20, when the blue chips ended at 7,552.29 — their lowest point in more than five years. It was also the blue chips’ biggest drop since Dec. 1.

Meantime dollar rose 1.59% against euro. On Tuesday at 21:03 (GMT) 1 euro cost $1.2889. In addition exchange rate of the pound fell to the lowest level against dollar for the past 8 years. Analysts tie the rate shifts to Obama’s assumption of the office. And though investors are expecting that Washington will be a central part of the economic recovery, the first hours of the new administration had little impact on their concerns.