Immigrant Son

By Eric Martin March 5 (Bloomberg) -- The Dow Jones Industrial Average fell 20 percent since Inauguration Day, the fastest drop under a new president, as investors speculated Barack Obama’s stimulus measures won’t revive the economy anytime soon. The Dow average slid 4.1 percent to 6,594.44 today, its 12th decline in 15 days, as the worst start to a year for U.S. stocks deepened. The Standard & Poor’s 500 Index lost 4.3 percent to 682.55, extending its retreat to 19.7 percent since Jan. 20. “It’s the Obama bear market,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “We don’t know what the rules are in so many different areas the government is touching.” The 20.4 percent drop in the Dow is the steepest for a new administration in at least 90 years, according to data compiled by Bloomberg. The Dow tumbled 25 percent in 2009, its worst annual start, as unemployment climbed and bank losses increased. The U.S. economy contracted at a 6.2 percent annual rate in the fourth quarter, the most since 1982, the Commerce Department said last week. Unemployment jumped to 7.6 percent, the highest since 1992, as Americans fell behind on their mortgages and banks seized homes at a record pace. Obama won approval from Congress last month for $787 billion of spending and tax cuts to reverse the recession. He proposed measures to stem home foreclosures and a budget that more than doubles spending to bail out banks. The moves haven’t halted the Dow’s 17-month sell-off to the lowest level in almost 12 years.

Citigroup, GM

Citigroup Inc. plunged 71 percent since Obama took office to $1.02, the steepest decline in the Dow, after the government proposed taking a 36 percent stake in the New York-based lender. Detroit-based General Motors Corp. tumbled 53 percent after the largest U.S. automaker said it needs more government aid. General Electric Co., located in Fairfield, Connecticut, erased half its value on concern losses will rise at GE Capital, threatening the parent company’s top credit rating. “Prospects for recovery in the financial sector, despite all the government help, still seem rather remote,” said John Carey, who manages $8 billion at Pioneer Investment Management in Boston. “We’ve had a weak economy for a couple of years, and we aren’t seeing the stimulus working at this point. That is what weighs on investors’ minds.’’ The 30-stock Dow average took eight months to decline 20 percent following the inauguration of George W. Bush, reaching the level on Sept. 20, 2001, nine days after terrorists attacked the World Trade Center in New York and Pentagon in Washington.

‘29 Crash

The crash of 1929 occurred seven months into the presidency of Herbert Hoover. Hoover presided over an 89 percent plunge in the Dow between September 1929 and July 1932, the steepest retreat ever. The Dow slipped into a bear market on July 2, 2008, when a 167-point decrease gave it a 20 percent loss from its record 14,164.53 on Oct. 9, 2007. Unlike the Standard & Poor’s 500 Index, the Dow’s rally from its November low of 7,552.29 fell short of a 20 percent bull market advance, ending at 19.6 percent on Jan. 2.

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