Struggling US economy causes stocks to nosedive

The fall experienced by the stock market on Tuesday has put the proposed $700 billion plan at stake; internal disputes of the congress may delay further the efforts to rescue the financial sector, thus pushing the U.S. economy into a greater darkness. However, it’s also true that index futures went up following an extended trading of $5 billion that went as an investment. It was Warren Buffett's Berkshire Hathaway keeping Goldman Sachs Group in its good books.

Following the investment was a straight 8.4% rise in the stock prices for Goldman Sachs; the side effects were futures that opened sharply higher on Wednesday, which also dragged the shares of other banks up. The highest was Morgan Stanley, with a 9.5 percent increase in electronic trading.

Probable factors for the disaster

Among many others, the statements from Richard Sichel (Chief Investment Officer, Philadelphia Trust Co.) reinforced some faith back into the financial sector. "It's clearly a positive when Warren Buffett sees value in a company. Buffett is so highly regarded as an intelligent value investor, if he's putting a lot of money into a company that's been beaten down, it sends a message to the market that maybe not every financial company should be ignored at this point." Considering the downgrades, the statement was enough to revive hope among many a hurt ones, including the shares of Bank of America (2.5%) as well as energy sectors that weakened with a rising oil price. As of now, to quote Edward Craig (Head, Cash Equities Trading, Jeffery’s Group, New York) - “everybody's waiting for this plan to be detailed, and the longer it's delayed, the more people speculate that maybe it won't happen. The one thing the market hates is uncertainty.” But while colossal organizations like General Electric (down by 4.6%), Apple Inc. (down by 3.2%) and Microsoft (down by 0.2%), there are more numbers of declining stocks that can outnumber the forward-moving shares by 2.6 on the NYSE.