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S&P Ends at 12-Year Low as Citi Stirs Fear

Stocks tumbled Friday and the S&P hit a 12-year low as news of the government's stake in Citigroup and General Electric slashing its dividend stirred worry in the market.

The Dow Jones Industrial Average shed 119.15, or 1.7 percent, to close at 7,062.93. The Dow has now fallen for sixth straight months, losing 39 percent of its value. The last time it lost this much in a six-month period was in 1932.

The S&P 500broke through its November low of about 740, dropping2.4 percent to close at 735.09, its lowest close since December 1996. The Nasdaq shed 1 percent to close at 1,377.84.

>> Dow Down 50% Since Peak

For the month, the Dow shed 12 percent, the S&P fell 11 percent and the Nasdaq lost 6.7 percent.

The Dow's worst performers in February were, not surprisingly: Citigroup, Bank of America and General Electric. The best performers this month were Wal-Mart, IBM and Intel.

Economic news offered no solace: Gross domestic product declined 6.2 percentin the fourth quarter, worse than the 3.8 percent reported in the first look at the final quarter of 2008, as exports plunged and consumer spending slowed dramatically.

From 'Fast Money':

Consumer confidence dropped to a three-month lowas consumers worried the recession may continue throught the rest of the year. And the Institute for Supply Management in Chicago said its gauge of Midwest business activity jumped to 34.2 in February from 33.3 last month.

There may be light at the end of the tunnel, though,as the current downturn is nearing the end of the typical length of the average bear market, analysts told CNBC this morning.

"The average bear market, over the past 100 years, has lasted 84 weeks. There are currently 10-12 weeks left in this market for it to become an average length recession," Alpesh Patel from Praefinium Group said.

Citigroup tumbled 39 percent, ending $1.50, following news that the government will be significantly increasing its stake in the troubled bank.

A Treasury official told CNBC the government will be offered the lowest price available to private investors to convert dollar-for-dollar $25 billion of preferred shares into common equity. It won't require any new money from the government.

Worries about which bank could be next rattled the entire sector. Bank of America dropped 26 percent to end at $3.95, and Wells Fargo skidded 16 percent to close at $12.10.

The government’s "stress-test" for determining the financial strength of the country’s top 20 banks came under fire from analysts. Some fear that banks may hoard cash and cut lendingin order to present a more robust balance sheet to regulators.

General Electric shares fell 6.5 percent to close at $8.51, following news that the conglomerate, also the parent of CNBC.com, would cut its dividend to 10 centsfrom 31 cents starting in the third quarter. The move is expected to save the company $9 billion annually.

Meanwhile, Kimberly Clark raised its dividend to 60 cents from 58 cents. Its shares rose 1 percent.

Health-care stocks continued to take a beating from worries about provisions in the Obama budget that could crunch the sector's profits. Merck lost 7.1 percent, while Johnson & Johnson shed 4.7 percent.

For the week, health insurers UnitedHealth and Humana were the biggest decliners, ending down 30 percent and 42 percent, respectively.

But tech stocks made a comeback from the morning slide, with Dell and IBM finishing up more than 3 percent.

And retail stocks also advanced, with Sears up 3.4 percent and Wal-Mart up 2.1 percent.

American depositary shares of BlackBerry maker Research In Motion rose 1 percent despite news that Japan's biggest cell-phone operator, NTT DoCoMo, has halted sales of the new BlackBerry Bold. Users have complained that the gadget can overheat when the battery is charging.

On Tap for Next Week:

MONDAY: Personal income, ISM manufacturing index; construction spending; Auto sales; Fed's Lacker speaks; Earnings from Dish Network
TUESDAY: Pending-home sales
WEDNESDAY: Weekly mortgage applications; ADP, Challenger jobs reports; ISM services index; Fed's beige book; Earnings from BJ's, Costco and Toll Bros.
THURSDAY: Chain-store sales; European rate decisions; weekly jobless claims; factory orders;
FRIDAY: Jobs report; consumer credit

Send comments to cindy.perman@nbcuni.com.

Symbol
Price
 
Change
%Change
DJIA
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S&P 500
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BAC
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C
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NASDAQ
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4331
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GE
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HUM
---
IBM
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JNJ
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1767
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MRK
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BB
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SHLD
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UNH
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WFC
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WMT
---
9437.T
---
BX
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MGLN
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AES
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