Obama and Stocks also Continue Slide

Despite an inspirational inaugural address from new U.S. President Barack Obama, stocks failed to gain any ground and drifted lower in afternoon trade. At 2:05PM, the Dow was down 197, the Nasdaq was down 62 and the S&P 500 was down 29.

Financial stocks are weak across the board following news of a second bank bailout in the UK, big losses at RBS (NYSE: RBS) and deteriorating profits and portfolio at State Street (NYSE: STT). Bank of America (NYSE: BAC) is down 19%, JPMorgan Chase (NYSE: JPM) is down 14%, Wells Fargo (NYSE: WFC) is down 20% and Citi (NYSE: C) is down 14%.

Commenting on the dismissal state of the economy in his speech Obama said, "Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America." Obama said we will build roads and bridges, the electric grids and digital lines that feed commerce. He also said, "we will harness the sun and the winds and the soil to fuel our cars and run our factories."It remains to be seen whether Obama's speech will quiet the cable news fixation with Wright—and whether addressing race in such a head-on fashion will pay dividends, in this closely fought contest, which has seen African-American voters flock overwhelmingly to his side. Will it win over the blue-collar white males who have been trending toward his opponent, or drive them away? But if it was a roll of the dice, Obama took the gamble with gusto—and deftly sought to repurpose the Wright controversy as an engine of the kind of change he has offered as the central thrust of his candidacy.

"We can tackle race only as spectacle, as we did in the O.J. trial. Or in the wake of tragedy, as we did in the aftermath of Katrina. Or as fodder for the nightly news," he said. "We can play Reverend Wright's sermons on every channel, every day and talk about them from now until the election, and make the only question in this campaign whether or not the American people think that I somehow believe or sympathize with his most offensive words. We can pounce on some gaffe by a Hillary supporter as evidence that she's playing the race card, or we can speculate on whether white men will all flock to John McCain in the general election regardless of his policies. We can do that.

"But if we do, I can tell you that in the next election we'll be talking about some other distraction. And then another one. And then another one. And nothing will change.

"That is one option. Or, at this moment, in this election, we can come together and say, 'Not this time.' This time we want to talk about the crumbling schools that are stealing the future of black children and white children and Asian children and Hispanic children and Native American children. This time we want to reject the cynicism that tells us that these kids can't learn, that those kids who don't look like us are somebody else's problem. The children of America are not those kids, they are our kids, and we will not let them fall behind in a 21st-century economy. Not this time."

Afterward Obama's aides applauded the speech as a way to take control of the narrative on race—and weave into it the story of his own life. "He has wanted to make this speech for a long time," says David Axelrod, Obama's senior strategist. "The question was when. He knew this was the right time. The firestorm about Wright and [former representative Geraldine] Ferraro meant that race was creeping up as a kind of dominant discussion." (Ferraro, a Clinton finance committee member, resigned her post after her own comments about Obama—suggesting he would not be enjoying such success as a candidate if he were white—caused a firestorm.)

Obama dictated a first draft to his young speechwriter Jon Favreau on Saturday, then reworked the speech until 3 a.m. Monday. He went at it anew on Tuesday, tweaking away until 2 a.m. Did Obama's political aides try to warn him off the idea? "It wasn't even a discussion," says Axelrod. "He was going to do it. I know this sounds perhaps corny, but he actually believes in the fairness and good sense of the American people, and the importance of this issue. His candidacy is predicated on the fact that we can talk to each other in an honest and forthright way on this and other issues."