Never in the history of the Dow Jones Industrial Average has the index risen more than 500 points in a single session. After last week’s historic largest weekly percentage loss ever, today the greatest one-day rally in the history of Wall Street occurred, with the Dow Jones average rising almost 1000 points to close at about 9400, up 11%. One key question on everyone’s mind tonight is whether the rally will last or if is the last gasp of the bull market that disappeared last week. The other key question is whether McCain can use this rally to get past narrative of defeat that has smothered his campaign since the crisis began.
Most political observers agree that the race between Obama and McCain for the presidency turned from a near dead heat in mid-September into a substantial 7 point Obama lead today because of the crash of the U.S. and world financial markets. The freefall in McCain’s popularity has been greatly assisted during the economic crisis by McCain’s early mishandling of the crisis via his oft-repeated line that “the fundamentals of the economy are strong.” Many independent and centrist voters were turned off by McCain’s stubborn refusal to accept the depth of the problems in the economy and now lean towards Obama.
The final straw to put many swing voters onto Obama’s side was the quarter ending 401K reports which show striking declines in most Americans’ retirement accounts that came in the mail in the past week or so. Whether the nearly 1000 point rally can turn this trend around will be determined in the days to come.
The onus is clearly on McCain to perform in the upcoming debate and use the turning economic news to his advantage quickly and perhaps avoid the imminent landslide facing him today. Obama can also point to his steady leadership as pleasing to Wall Street and further highlight McCain’s erratic performance in the past month.