Financial Crisis Update: Friday, October 3, 2008

by Advisor Products Inc. 10/3/2008 11:35:00 AM

Wall Street closed its worst week since 2001 with fresh losses as fear of a full-fledged credit crisis and ongoing economic concerns conspired to drive share prices sharply lower. Major U.S. indices fell another 1.3% to 1.5% despite the eagerly awaited passage of a $700 billion package of aid for the banking system. Bond yields continued to sink as Treasury debt beckoned investors as a relatively safe haven from the stock market carnage. For more, please read:http://www.msnbc.msn.com/id/3683270/

$700 Billion Bailout PassesAfter two weeks of sometimes heated debate, the Treasury’s far-reaching and historic plan to bail out the nation's financial system—now with added tax breaks and other incentives to tempt recalcitrant members of Congress—was signed into law by President Bush on Friday afternoon. Whether it will provide what it takes to keep the credit markets moving and keep the economy out of the grip of recession remains to be seen.

Job Market Takes Another HitOutside the credit markets, investors pondered news that U.S. payrolls plunged in September, leaving some speculating that bailout or no bailout, a recession could be waiting in the wings. Although the unemployment rate remained unchanged at 6.1%, a net 159,000 jobs still disappeared in September.

Candidates Tighten Focus On EconomyNow that the debate between Sarah Palin and Joe Biden is over (and the bailout has been passed), presidential candidates Barack Obama and John McCain have increased the intensity of their economic rhetoric in an attempt to calm the fears of investors and consumers alike. Social Security and taxes are now headline issues, as is the welfare of the middle class.