US stocks fall after Bush announces $150 billion economic plan

Stocks fall after Bush announces plan

By MADLEN READ AP Business Writer

Jan 18, 2008, 11:58 AM EST

NEW YORK (AP) --

Wall Street turned lower Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's economic stimulus plan.

Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.

"It's disappointed in the size of the economic growth package. Wall Street's showing its displeasure," said Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh. "Honestly, I think the institutional investors understand the limits to the government's ability to enact economic change."

The Dow Jones industrial average, up more than 180 points in morning trading, was down 58.61, or 0.48 percent, at 12,100.60 minutes after Bush finished speaking. The Dow plunged 306 points Thursday amid deepening pessimism about the economy.

The broader Standard & Poor's 500 index fell 13.72, or 1.03 percent, to 1,319.53, while the technology-focused Nasdaq composite index fell 9.40, or 0.40 percent, to 2,337.50.

Bush calls for economic package worth about $150 billion

By ANDREW TAYLOR and DEB RIECHMANN Associated Press Writer

Jan 18, 2008, 11:44 AM EST

WASHINGTON (AP) -- President Bush on Friday called for about $145 billion worth of tax relief and other incentives to stimulate a sagging economy and fend off a possible recession. He said a growth package must include tax incentives for business investment and "direct and rapid" tax relief for individuals.

Bush said that to be effective, an economic stimulus package would need to roughly represent 1 percent of the gross domestic product - the value of all U.S. goods and services and the best measure of the country's economic standing. White House advisers say that, in current terms, 1 percent would amount to around $145 billion, which is along the lines of what private economists say should be sufficient to help give the economy a short-term boost.

"Letting Americans keep more of their money should increase consumer spending," he said.

Bush said that Congress should work as soon as possible to send him legislation to "keep our economy growing and creating jobs."

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

"This growth package must be big enough to make a difference in an economy as large and dynamic as ours, which means it should be about 1 percent of GDP," Bush said. He said the package should be built on "broad-based tax relief" that will directly affect economic growth.

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