By Kate Gibson
The stock market's tentative Wednesday moves came as investors
clamored for additional details on the Obama administration's plan
to help struggling home owners.
In unveiling his strategy Wednesday afternoon in Phoenix,
President Obama should offer "more details, rather than less, to
avoid the fallout after [Treasury Secretary Tim] Geithner's
non-plan plan," said Dan Greenhaus, an analyst with the equity
strategy group at Miller Tabak & Co.
"It's important to announce specific dates and specific monetary
quantities to give the market a firm handle on how much he intends
to do and when he intends to do it," Greenhaus said.
Earlier Wednesday, the administration laid forth a $75 billion
program for "at risk" homeowners aimed at slowing foreclosures.
The program's funding is larger than the $50 billion speculated,
said Greenhaus.
The government's plan to subsidize the reduction of mortgage
rates begs the question of "how to separate those that took
unnecessary financial risk or those families strained by reduced
income or loss of jobs entirely. In the case of the latter, I don't
think anyone would argue against helping those people. In the case
of the former, there is the real threat of moral hazard," said
Greenhaus.
Last week, Geithner's strategy for straightening out the U.S.
banking industry got widely panned by investors, who found it
lacking in specifics.
After slipping to three-month lows during Tuesday's session,
equities wavered between modest gains and losses in recent action,
with the Dow Jones Industrial Average (DJI) lately up 55.44 points
at 7,608.04.
Financials turned tail on earlier losses to front the gains.
The S&P 500 (SPX) gained 6.08 points to 795.25, and the
Nasdaq Composite (RIXF) climbed 14.87 points to 1,484.73.
Financials turned tail on early losses, with real estate
investment trust Developers Diversified Realty (DDR) among those
gaining, recently up nearly 7%.
While the banking sector would likely benefit from any plan
bolstering the embattled housing market, but the help would not be
in the same direct fashion that would come if the government
stepped up with a specific plan for troubled assets, said
Greenhaus.
If the housing plan works, the housing sector and ancillary
sectors including home improvement and construction would stand to
benefit, said Greenhaus, pointing to Home Depot Inc. (HD) and
Lowe's Companies Inc. (LOW).
"Anything that makes housing materials, like furniture companies
and those that make gardening equipment. Some of these sectors have
been hit very hard; if you see a rebound in housing there is a
whole different series of ways to play," Greenhaus said.