So Much for a Santa Claus Rally

“I haven’t made up my mind.”

So said President George W. Bush about a possible bailout for Detroit’s automakers. And down went General Motors , and the Dow, as the market began to price in the possibility of bankruptcy in the automakers.

But that wasn’t the only cause behind the Dow giving back all but 50 of the 320 points it climbed on Tuesday. General Electric’s credit rating was called into question, and that, too, pushed stocks down. GE is, after all, the biggest company in the U.S. (and the parent company of NBC Universal). The loss of its AAA reputation would cause an enormous loss in confidence throughout the markets, to say the least.

Declining oil is also a concern. While consumers love cheaper gas and electricity prices, $36 oil is a sign of a slowing global economy. It means less industrial production, less manufacturing and less shipping. So, to state the obvious, it’s not good for the economy when oil drops 59% for the year, and 75% from its peak.

And what’s bad for the economy, Cramer said, is worse for the market. Oil stocks are a big part of the key indices. Exxon Mobil is the second-largest Dow component, and Chevron’s the third. That’s 14% of the Dow, which means just these two companies accounted for 62.5 points of today’s 219-point decline.

These three factors make for a deadly combination, Cramer said, hence Thursday’s sell-off. Maybe Research in Motion’s post-bell upside surprise will prop up the market Friday, but regardless, any Santa Claus rally we might have expected is all but gone.

Jim's charitable trust owns Chevron and General Electric.

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