Stocks pulled back again Thursday as Wall Street turned its attention to Washington and its stewardship of the economy, but retail stocks escaped the worst of the damage.
The S&P Retail Index backtracked 1.83 points, or 0.5 percent, settling below 400 at 398.34, but outperforming the Dow Jones Industrial Average, which declined 115.70 points, or 1.1 percent, to 10,120.46, and the S&P 500, down 12.97 points, or 1.2 percent, to 1,084.53. Weak readings on the tech sector sent the Nasdaq Composite down 42.41 points, or 1.9 percent, to 2,179.00.
The markets were already closed when word arrived the Senate had confirmed Federal Reserve chairman Ben Bernanke for a second term on a vote of 70 to 30, but had time earlier in the day to absorb President Obama’s State of the Union address, delivered to Congress on Wednesday night.
Although the Fed chairman had come under steady fire for his role in the federal government’s $700 billion bailout of banks and financial firms, questions about his reappointment — and about just how far Obama would go to regulate the financial sector — had applied downward pressure on stocks throughout the week. Although Bernanke’s likely reconfirmation didn’t stabilize stocks on Thursday, it helped limit the breadth of the sell-off.
Still, critics are certain to keep a sharp eye on Bernanke after blaming him for failing to see the looming financial crisis which brought economic activity to a near standstill in September 2008.
President Obama today is set to propose two separate tax cuts for small businesses, following up on a pledge in his State of the Union address, according to the White House.
The first tax break will come in the form of a $5,000 credit for every new employee hired. The total amount of the credit for any one firm will be capped at $500,000 and start-ups will be eligible for the tax credit. Companies will be able to claim the credit on a quarterly basis.
The President will also propose to reimburse Social Security payroll taxes to small businesses that increase wages or hours for their employees. However, small businesses will be deemed ineligible for either tax break if they reduce employment payrolls in 2010.
During his speech Wednesday night, Obama proposed a new small business tax credit, which he said would go to more than 1 million small businesses who hire new workers or raise wages.
The strongest performer among the 172 firms tracked by WWD was Destination Maternity Corp., shares of which advanced 11.3 percent, to $23.78, after the firm reported an unexpected first-quarter profit.