January 2nd, 2009
02:53 PM ET

Financial Dispatch: Wall St. hopes for better 2009

Andrew Torgan
CNN Financial News Producer

Wall Street officially welcomed 2009 today with a big rally, and investors are hoping it will be a heck of a lot better than 2008. Traders are looking for a fresh start after one of the worst years in Wall Street's history. Last year, the Dow Jones Industrial Average fell 34%, the S&P 500 lost 39% and the Nasdaq slid 41%.

A key index of the nation's manufacturing activity fell to a 28-year low in December. The Institute for Supply Management said its manufacturing index was 32.4 for December. That's the lowest reading since June 1980, when it stood at 30.3. Economists say a reading this low indicates a deep recession.

How scary was it for investors last year? They pulled a net $320 billion from mutual funds in 2008, a record in both dollar terms and as a percentage of assets, in one of the biggest flights to safety the industry has seen. The move out of what were previously regarded as safe and stable investments followed a record year of investor inflows in 2007. Stock funds had outflows of $233.5 billon in the year to December 29, with bond funds seeing outflows of $58.2 billion and balanced funds – which include both – having outflows of $28 billion.

Oil prices are up about $1 to around $46 a barrel. Crude surged nearly $6 on the last day of 2008 – or more than 14%. Oil hit $100 a barrel for the first time one year ago today.

Federal prosecutors are reportedly beginning to consider what role offshore fund operations may have played in the alleged $50 billion Ponzi scheme that Bernard Madoff is accused of orchestrating. Of particular interest is whether. Madoff and some of his investors used funds based in offshore tax havens to evade American taxes. Also under scrutiny is whether certain charities invested with Madoff had improperly allowed their donors to shift money offshore, and whether foreign banks had withheld American taxes on Madoff accounts, as required by the IRS.

Gas prices are up 0.8 cents to $1.626 a gallon - the third consecutive increase this week. The last time the national average price for a gallon of regular unleaded was near the current price was February 5, 2004, when it averaged at $1.627. Two states have regular unleaded gas prices of $2 and higher. 48 states and the District of Columbia have regular unleaded gas prices below $2. The most expensive gas in Alaska ($2.521), while the cheapest is in Wyoming ($1.395)

And there’s a new top dog in the banking world. Bank of America completed its purchase of Merrill Lynch & Co. Thursday, creating the largest U.S. bank. Bank of America now tops JPMorgan Chase and Citigroup in size, with about $2.7 trillion of assets.

Filed under: Andrew Torgan • Economy • Finance • Wall St.
soundoff (6 Responses)
  1. KAREN

    Im sick of being robed by my own goverment,the gas prices just went down,and now they want rase the taxes agin WHAT THATS CRAZY ,gas sshould be .89 a gallen 4 ever now ,come on,the rich are wealthy enoph eny body ever ask where all that money went to,ill be glad to see BUSH out of office.

    January 2, 2009 at 8:52 pm |
  2. earle,florida

    I'll sum up "Bank of America" ,NYSE symbol "BAC" in three words: "Bank of China",....

    January 2, 2009 at 5:55 pm |
  3. Joanne, Solvay, NY

    Good luck ...Wall Street! No one can afford new products when they are losing their homes and jobs.

    January 2, 2009 at 5:27 pm |
  4. Steven Eck

    Is anyone else been asking why the Feds/States want to raise the gas tax by 10cents.And why Oregon wants to add a milage tax.The country and the goverment ask us to concerve gas,drive less,plan your trips.Know that we are doing what they ask,they want to tax us again.Who is raping us-the oil comp/or the goverment?If you ask me we are dammed if we do and dammed if we do.So i say the hell with driving less,burn up that cheap gas while you can.Cause you know they are going to raise it back up by spring or summer.

    January 2, 2009 at 4:38 pm |
  5. Annie Kate

    Gee, they only suspect that Madoff and friends put the money in offshore accounts to evade taxes? Wake up people – its done every day and done by some top corporations. Its getting to be a joke – there are corporations who incorporated in Bermuda and only have a "show office" there that does nothing but establish the address for the corporation to be eligible to incorporate there. Then to add insult to injury the same companies lay off American workers and ship the majority of the work done for American companies off shore. This offshore work includes financial data with social security numbers, wage figures, etc – how safe does that feel?

    If a company operates on American soil and does a substantial amount of business in the US they should be taxed like an American company; we are letting millions of dollars flow out of our country by not taxing them. And there are some types of data that should never be sent overseas because of identity theft. We need to wake up and be realistic – America should be first with companies that are operating in our country and we should guard our data zealously. We are heading for a really hard landing one of these days if we don't correct this mess soon.

    January 2, 2009 at 4:08 pm |
  6. Cindy

    I think we are all hoping and praying for a better 2009 for Wall Street and every where else.


    January 2, 2009 at 2:55 pm |