Stocks Lose 5% for Week as Banks Slide
Stocks fell sharply in the final minutes of trading, capping a dismal week dominated by the stimulus plan and subsequent pounding of bank stocks.
The Dow Jones Industrial Average ended a yo-yo session down 82.35, or 1 percent, to close at 7,850.41. This was the Dow's fourth consecutive close below 8,000 and its longest sub-8,000 streak since March 2003.
The S&P 500tumbled 1 percentand theNasdaq lost half a percent, as investors scooped up some tech bargains.
For the week, the Dow finished down 5.3 percent, the S&P skidded 4.9 percent and the Nasdaq dropped 3.6 percent.
Financials were the week's worst-performing S&P group, down 10 percent, while health care was the best performer, down just 2.4 percent.
Banks started off the week on an up note as investors hoped the bailout would help spare them having to watch the stocks ground down to zero. Tuesday brought Treasury Secretary Geithner's revelation of what would be in the stimulus plan but his broad strokes didn't score any points with investors and banks took the brunt. By Thursday, some details of the mortgage-rescue plan began to emerge but investors were rattled by this so-called "stress test" for banks, caps on bonuses and the overall feeling that these measures wouldn't save the stock prices.
Friday, the hit came from overseas, when British bank Lloyds said its HBOS subsidiary posted a loss of 8.5 billion pounds($12.28 billion) as it was hit by a 7-billion-pound impairment charge at its corprate division. In London, Lloyds shares fell 33 percent.
JPMorgan was the biggest drag on the Dow Friday, falling 5.7 percent, and Bank of America and Citigroup weren't far behind.
Insurers also took a beating, with American Express coming in as the Dow's weakest performer for the week, down more than 12 percent.
The Dow's best performer this week was General Electric , which gained 3.1 percent.
The House passed the $787 billion economic-stimulus billin a 246 to 183 vote Friday. Now, it's on to the Senate, where a final vote could come tonight. Obama has said he would like it on his desk to sign on Monday, President's Day.
Also stirring some buzz in the market was news that President Obama will announce a plan next week to stem home foreclosures.
Tech stocks advanced Friday as investors looked to the beaten-down sector for investment opportunities.
Chips blazed the trail, with Texas Instruments up 3.4 percent and National Semiconductor up 2.7 percent.
Other techs, including Hewlett-Packard and Yahoo also posted strong gains.
With the stimulus package close to a vote, Congress agreed late Thursday on a "strong" Buy American provisionthat would see much of the public works in the $789 billion bill going to US companies. But there is language in the bill calling for the US to honor trade pacts with certain nations.
General Motors is preparing a plan on how to use government bailout money to restructure its operations. The plan is due Tuesday from GM, which also refuted reports that it was preparing to sell its stake in a joint venture with Shanghai's SAIC Motor. GM shares fell 5.7 percent.
Meanwhile, Toyota Motor said it was slashing executive compensation and offering buyouts to 18,000 workers to combat a slump in domestic auto sales. Its shares dropped 3 percent.
PepsiCo shares rose 1.1 percent after the company reported a sharp loss in quarterly profit but met Wall Street expectations of 46 cents a share.
Abercrombie and Fitch shot up more than 10 percent after the teen retailer beat analysts' earnings expectations and said it is optimistic about international expansion.
Stocks were mostly higher in morning trading in Europe, while the major indexes in Asia also posted gains.
"I think there's a chance for a run up to the recent highs of 870 (on the S&P 500)," David Jones, chief market analyst at IG Index, told "Worldwide Exchange."
But the market really needs a stronger catalyst and could be stuck in a trading range until more big-name earnings come out, Jones added.
Also Thursday, Republican Sen. Judd Gregg of New Hampshire withdrew his nomination as commerce secretary, citing conflicts with President Barack Obama's handling of the stimulus package.
In economic news, U.S. consumer sentiment fell to its lowest level in three monthsas nearly two-thirds of those surveyed said they expected the downturn to last five more years.
MONDAY: All U.S. financial markets closed for President's Day
TUESDAY: NY Fed Empire State survey; NAHB housing index; Fed's Bullard speaks; Earnings from Wal-Mart
WEDNESDAY: Weekly mortgage applications; housing starts; import/export prices; Fed's Bernanke, Pianalto, Evans speak; industrial production; Fed minutes; Earnings from HP and Analaog Devices
THURSDAY: PPI; weekly jobless claims; leading indicators; Philly Fed survey; weekly oil inventories; Fed's Lockhart speaks
FRIDAY: CPI; Earnings from JCPenney and Lowe's
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