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Two economic advisors gone { December 5 2002 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A33759-2000Jun21.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A33759-2000Jun21.html
Markets Recover From Early Losses
By Jerry Knight
Washington Post Staff Writer
Thursday, December 5, 2002; 5:10 PM
The stock market plunged this morning on reports that the nation's unemployment rate has jumped to 6 percent, and then it recovered on the news that the jobless will soon include President Bush's two top economic policymakers.
The sacking of Treasury Secretary Paul O'Neill and economic adviser Lawrence Lindsey within minutes after the unemployment report was a coincidence in timing, but the two were clearly related.
The unexpected jump of 0.3 percent in the unemployment rate is a symptom of the economic problems that prompted the president to order a regime change in the economic policy shop at the White House.
And the stock market's recovery was in essence a poll on the impending departure of O'Neill and Lindsey, which Wall Street interpreted as a sign the president is not only benching his backfield but revamping his offense.
The resurgence of unemployment, which is now back up to where it was last April, puts new pressure on the president to do something to stimulate the economy and gives him a new argument for what he wants to do: cut taxes.
Wall Street didn't need to know any more than that to conclude that whatever happens next, it's probably going to be better for stocks than what's been happening.
The reaction was not enough to trigger a major market rally, but it was sufficient to stop the five-day slide in the Dow Jones industrial average. Recovering from a 100-point dive after the opening bell, the Dow closed at 8,645.77, up more than 22 points.
The Nasdaq Stock Market composite index gained nearly 12 points to end the day at 1,422.36.
The Standard & Poor's 500 stock index rose nearly 6 points to 912.23.
While today's recovery ended the five-day losing streak, the losses earlier in the week were enough to terminate the seven-week winning streak that had pushed the Dow ahead by more than 20 percent. For the week, the Dow was off about 3 percent.
The Nasdaq and the S&P, which had been up for seven of the past eight weeks, also ended this week with losses--about 3 percent for the S&P and 4 percent for the Nasdaq.
© 2002 The Washington Post Company
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