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Wednesday, January 21, 2009

Stock Markets and Inaugurations

Yesterday, the Dow dropped approximately 4%, and the S&P500 dropped by a little over 5% on Inauguration day. This was the worst "inauguration market" day in history. So now we'll wait to hear the talking heads either say how there's a correlation (or even a causation) between the two, or explain how there's not.

In reality, it was probably more due to State Street Bank's disappointing earnings numbers - their stock plunged almost 60% on the news, and led many other financial stocks down. If markets are efficient (and they are, relatively speaking), Obama's inauguration should already have been priced in.

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