Stocks are holding well below the unchanged line during mid-afternoon trading on Monday, although selling pressure has waned from earlier in the day. The weakness comes as investors respond to U.S. government's refusal to accept the restructuring plans offered by General Motors (GM) and Chrysler.
President Obama and his auto task force have indicated that General Motors and Chrysler have not gone far enough in their restructuring plans and need to step up their efforts to reorganize in order to receive additional government aid.
In an interview with RTT News, Ron Kiddoo, chief investment officer at Cozad Asset Management attributed the market's sharp sell off to uncertainty surrounding GM and Chrysler and the rally just running a little bit out of stream.
Kiddoo said the auto news has to be pretty well anticipated given the rate of auto sales and predicts a forced bankruptcy would be positive long term. In terms of the broader market, Kiddoo said the bear market rally can continue, but he warned that it might not be for a couple of weeks.
The major averages have moved roughly sideways throughout the afternoon, lingering firmly in negative territory. The Dow is currently down 281.96 at 7,494.22, the Nasdaq is down 49.05 at 1,496.15 and the S&P 500 is down 30.27 at 785.67.
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