Stocks today held up well in the face of political budget turmoil in Washington DC. At the close the Dow was up 53 at 26,071 on heavy trading volume. For the week the Dow was up 0.9% or about 229 points.
In regards to a gubment shutdown, Brian Wesbury, Chief Economist at First Trust and honorary member of the Westport Mafia, noted the last GOP gubment shutdown occurred back in 1995/96 during the Clinton Presidency. The shutdown back then resulted in welfare reform, less gubment spending and a budget surplus. During the 1995 and 1996 time frame the Dow Jones Industrial Average went from about 4,000 in early 1995 to over 6,500 in late 1996. The worst pullback on a monthly basis during that time was 2.2%in July of 1996.
Legacy tech giant IBM reported its first quarterly revenue gain in a blue moon as Big Blue posted a 4% sales increase and a 3% gain in net income. The revenue gain was the first in 6 years and was made possible due to increased hardware equipment sales particularily when the Smithsonian agreed to buy some original IBM 360s for display. Shares however fell on the news after the gurus said the quality of the earnings was suspect and would like to see more consistency before they jump on board.
Shares of GE went below $17 per share today as rumors abound that a breakup may be in the works along with a possible need for the company to do a capital raise. What a train wreck. For years GE rewarded shareholders at the expense of employees and the pension fund and now those chickens have come home to roost. While some think GE is a good value the uncertainty factor with regards to how they will get out of this slump is high and as we all know with Wall Street……uncertainty = fear = falling prices.