The head of the New York Stock Exchange predicts another wild day of trading when the market reopens this week.
The New York Stock Exchange plunged almost 400 points on Friday. Chairman Dick Grasso says it is unlikely the market will rebound on Monday. "Mondays following Friday declines have always been difficult and I suspect tomorrow will be no different," he said.
Mr. Grasso says jittery investors should look at the market and think long-term. During an appearance on NBC television's Meet the Press he said the downward spiral will reverse course in time. "Please be patient," he said. "Please don't do something that emotionally feels good but in the long term will be a mistake."
The stock market chairman stressed the fundamentals of the economy are strong and the market ultimately will reflect these economic trends. He said a string of corporate scandals is to blame for the stock market's current woes. "I think investors, unfortunately, have been disappointed by a number of failures on the part of some companies to be truthful and honest with their investors," said Dick Grasso. "The public's confidence has been tested."
He said the situation will change once strong measures are in place to assure corporate responsibility, pointing to legislation rapidly making its way through the U.S. Congress.
But that legislation is accompanied by a sharp rise in political tensions, as Democrats and Republicans blame each other for the problems in corporate America and the resulting stock market slide.
On the CBS program Face the Nation, Senator John Edwards, a North Carolina Democrat, said the Bush administration has not done enough to restore the faith of the American people in the business sector. "And I do think they worry some about whether this president and this administration see things through the eyes of CEO's," he said. "I think they want to see action, and not just speeches." There are indications the Democratic criticism has hit a raw nerve with Republicans in Congress who worry their party's tradition of support for big business could now create problems with voters. But the Majority Leader in the House of Representatives is downplaying the notion of a Republican Party split. Dick Armey told Meet the Press all Republicans share a common concern. "We are nervous on behalf of the economy," he said. "No Republican I know discusses this within the context of their politics. Only the Democrats are doing that."
The response to the current corporate turmoil has become perhaps the biggest issue in this congressional election year with control of the legislature is at stake. Voters will go to the polls in November to elect a new House of Representatives and one-third of the Senate.