Stocks Shed 1% as Obama Spooks Market
Stocks declined Wednesday as a late warning from President Obama about stricter oversight for Wall Street knocked major indexes off their highs for the day.
Stocks had pared losses earlier after comments by Fed Chairman Ben Bernanke assuaged concerns about nationalization of major banks but pulled back in the finally hour after Obama's remarks.
The Dow Jones Industrial Average lost 80.05, or 1.1 percent, to close at 7,270.89. The S&P 500shed 1.1 percent to end at 764.89, and theNasdaq dropped 1.1 percent to close at 1,425.43.
Obama said financial institutions that pose a serious risk to markets should be subject to serious government oversight, in remarks after a meeting with Treasury Secretary Geithner and others on financial regulation.
"Whenever there is a question about how large the government role will be ... the market doesn't like that," Peter Kenny, managing director at Knight Equity Markets, told Reuters. "As we came close to the bell we got the curveball: Our president came on TV," he said.
Meanwhile, in his second day of testimony on Capitol Hill, Bernanke said there was no plan to nationalize troubled U.S. bank Citigroup .
Citigroup ended down 3.1 percent, after taking turns at both the top and the bottom of the Dow stack today.
General Motors rallied for a second day, leading the Dow with a nearly 15-percent gain, as investors were comforted by comments from a U.S. senator yesterday that the goal of Obama administration's auto task force isn't to force auto makers into bankruptcy.
It was followed by Bank of America and JPMorgan , which locked in the No. 2 and No. 3 spots, respectively.
Earlier, Bank of America had taken a hit after Merrill Lynch posted a loss of $15.84 billion, half a million more than Bank of America had anticipated.
Wall Street was disappointed in an unexpectedly plunge in existing-home sales and took little solace from President Obama's speech to Congress last night. The speech provided vague assurances that the government would take steps to shore up the financial sector but Obama also was critical of market excesses.
"I don't necessarily like the tone that he applied to the business community and I think it lacked a lot of detail," Sean Clark, of Clark Capital Management, said on CNBC. "Of course it wasn't a venue for a lot of details, but I still think there's a lack of confidence in the administration that stems from two weeks ago when (Treasury Secretary Timothy) Geithner came out and really didn't have a plan."
Ford ticked higher following news that CEO Alan Mulally and Executive Chairman Bill Ford will have their salaries slashed by 30 percent for this year and next. And Ford's board gave up all cash compensation for the current year.
AT&T rose 2 percent after JP Morgan upgraded the company's stock to "overweight."
Fertilizer-maker CF Industries Holdings jumped more than 11 percent as Agrium is offering to buy the company for $3.6 billion purchase, or 72 cents a share, which represents a more-than-30-percent premium.
Wynn Resorts shares plunged 16 percent as the recession hit the Las Vegas hotel and casino operator and sent quarterly revenue down sharply.
Retailer TJX was among the S&P 500 leaders, rising 7.3 percent, as the operator of T.J. Maxx and other stores beat analyst estimates even as its quarterly profit fell 17 percent.
Ambac lost 9.9 percent after the bond insurer posted a fourth-quarter loss of $2 billion that was less than the previous year but far worse than analyst projections. The loss translated to $6.79 a share, compared to estimates of a 68-cent loss.
Saks jumped 13 percent after the high-end retailer missed analyst estimates with a whopping $98.8 million loss but CEO Steve Sadove said steep discounts were "a one-time phenomenon" and that the retailer was taking steps to ensure that it won't have to implement such margin-eroding discounts again.
Elsewhere, shares of heavy-equipment vendor SPX gained 6.4 percent after the company swung to a fourth-quarter loss but reported revenue that was 17 percent higher than last year.
Discovery Communications jumped nearly 13 percent as the producer of Discovery Channel and the Learning Channel was optimistic about the year ahead despite missing revenue and outlook targets.
Still to Come:
THURSDAY: Durable-goods orders; weekly jobless claims; new home sales; earnings from Cablevision, Dell, Gap, and Kohl's
FRIDAY: GDP; consumer sentiment
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