chapter  14
71 Pages

The Rise and Fall of the Subprime Crisis

On the first day of trading in 2009, the Dow Jones Industrial Average jumped by 258.30 points, to close at 9034.69. However, the first full week of trading in the new year witnessed a disappointing decline of 4.8 percent in the S&P 500 Index, its worst performance since November. Crude oil prices remained volatile, jumping by 40 percent between Christmas and the first week of January 2009, before sharply declining once again, and they dipped to $35.40 a barrel on January 15, 2009. Layoffs were carried out at large companies across the country, including Hertz, ConocoPhilips, and AMD. Alcoa announced on January 6, 2009, layoffs of 13,500 employees, about 13 percent of its workforce. The company had posted a loss of $1.19 billion in the fourth quarter of 2008, and its sales were down by 19 percent from the prior year. That news was followed by a report that Boeing was laying off 4,500 employees. Microsoft sustained an 11 percent decline in profits in 2008 and cut 5,000 jobs. A $100 million theme park, Hard Rock Park in Myrtle Beach, South Carolina, declared bankruptcy on January 6, 2009, after having been in operation for only nine months with few attendees.