Saturday, February 21, 2009
8:13 am - US Stocks slide due to Bank.
By Geoffrey Rogow Of DOW JONES NEWSWIRESNEW YORK (Dow Jones)--
Stocks limped their way through Friday's session, with the usual suspects in theDow Jones Industrial Average pushing the bellwether index even further past its bear-market lows.Leading the decliners Friday in the Dow were Citigroup, off 56 cents, or 22%, to 1.95; Bank of America,down 14 cents, or 3.6%, to 3.79; General Electric, down 68 cents, or 6.8%, to 9.38; and General Motors,off 23 cents, or 12%, to 1.77. Overall, five of the 30 Dow components now trade below $10, a previouslyincomprehensible development, with traders saying the idea that buying large company stocks in and ofitself would keep them safe has broken.Despite finishing lower, large banks closed well above their lows of the day. Comments from the WhiteHouse that it wishes to see banks remain in private hands helped pare some declines, though talk of nationalizationstill dominates. Few were willing to hold onto a bank stock over the weekend.
The Financial Select Sector SPDR Fund closed down 1.5% at 7.44, after hitting a low point of 6.85 on the session.Traders have largely bemoaned any nationalization plan, noting that while such a move could benefit shareholderslong-term, should banks' financial assets continue to deteriorate there is an argument that the capitalbasis could evaporate to the point that shareholders would be left with nothing.Not to be ignored for banking stocks was the continued crowd into a "fear trade." Gold prices hit $1,000an ounce early in the session, while Treasury securities gained throughout the day's trade.For equities, the fear trade isn't just to sell stocks but to bet on a decline. Notably, puts, or theright to sell banking stocks, have ratcheted up for the better part of a month. Moreover, short-interestlevels for banking stocks such as Citigroup, Bank of America and even General Electric have moved higherin the past two weeks."It's basically impossibly hard to call a bottom for bank stocks," said Craig Peckham, equity tradingstrategist with Jefferies. "And with the inability of the marketplace to pinpoint any base value forbanks, the loss story and capital-erosion picture continues to drive shorts."Overall, the Dow closed down 100.28 points, or 1.34%, at 7365.67, bouncing back from a midday slide below its October 2002 closing low of 7286.27.While the Dow Jones Industrial Average already hit a more than five-year low, the Standard & Poor's indexgot perilously close and then bounced for part of the afternoon. The S&P 500 Index closed down 8.89,or 1.14%, at 770.05 after hitting a low of 754.23, near its November closing low of roughly 752.The Dow closed the week down 484.74 points, or 6.17%, while the S&P 500 slid 56.79, or 6.87%. The declinefor the Dow was its worst week since the week ended Oct. 10.The Nasdaq Composite Index closed Friday down 1.59 points, or 0.11%, at 1441.23, finishing the week down 93.13, or 6.07%.Further hurting the broad indexes, General Electric, the industrial bellwether that also has large financialexposure, closed under $10 for the first time since Sept. 11, 1995.GE shares have been battered along with the banks and are off 42% for the year to date, with balance-sheet concerns driving much of the slide.Small-cap General Motors was the second-worst performer on the Dow as worries continued over the company's latest recovery plan won't work.Still, despite the broad indexes' moves below November levels, other market indicators have not followedsuit. Notably, the CBOE Market Volatility Index closed up 4.9% at 49.37, well off its November highsYou can use this link on the day this article is published and the following day.-0-Copyright (c) 2009 Dow Jones & Company, Inc.
Stocks limped their way through Friday's session, with the usual suspects in theDow Jones Industrial Average pushing the bellwether index even further past its bear-market lows.Leading the decliners Friday in the Dow were Citigroup, off 56 cents, or 22%, to 1.95; Bank of America,down 14 cents, or 3.6%, to 3.79; General Electric, down 68 cents, or 6.8%, to 9.38; and General Motors,off 23 cents, or 12%, to 1.77. Overall, five of the 30 Dow components now trade below $10, a previouslyincomprehensible development, with traders saying the idea that buying large company stocks in and ofitself would keep them safe has broken.Despite finishing lower, large banks closed well above their lows of the day. Comments from the WhiteHouse that it wishes to see banks remain in private hands helped pare some declines, though talk of nationalizationstill dominates. Few were willing to hold onto a bank stock over the weekend.
The Financial Select Sector SPDR Fund closed down 1.5% at 7.44, after hitting a low point of 6.85 on the session.Traders have largely bemoaned any nationalization plan, noting that while such a move could benefit shareholderslong-term, should banks' financial assets continue to deteriorate there is an argument that the capitalbasis could evaporate to the point that shareholders would be left with nothing.Not to be ignored for banking stocks was the continued crowd into a "fear trade." Gold prices hit $1,000an ounce early in the session, while Treasury securities gained throughout the day's trade.For equities, the fear trade isn't just to sell stocks but to bet on a decline. Notably, puts, or theright to sell banking stocks, have ratcheted up for the better part of a month. Moreover, short-interestlevels for banking stocks such as Citigroup, Bank of America and even General Electric have moved higherin the past two weeks."It's basically impossibly hard to call a bottom for bank stocks," said Craig Peckham, equity tradingstrategist with Jefferies. "And with the inability of the marketplace to pinpoint any base value forbanks, the loss story and capital-erosion picture continues to drive shorts."Overall, the Dow closed down 100.28 points, or 1.34%, at 7365.67, bouncing back from a midday slide below its October 2002 closing low of 7286.27.While the Dow Jones Industrial Average already hit a more than five-year low, the Standard & Poor's indexgot perilously close and then bounced for part of the afternoon. The S&P 500 Index closed down 8.89,or 1.14%, at 770.05 after hitting a low of 754.23, near its November closing low of roughly 752.The Dow closed the week down 484.74 points, or 6.17%, while the S&P 500 slid 56.79, or 6.87%. The declinefor the Dow was its worst week since the week ended Oct. 10.The Nasdaq Composite Index closed Friday down 1.59 points, or 0.11%, at 1441.23, finishing the week down 93.13, or 6.07%.Further hurting the broad indexes, General Electric, the industrial bellwether that also has large financialexposure, closed under $10 for the first time since Sept. 11, 1995.GE shares have been battered along with the banks and are off 42% for the year to date, with balance-sheet concerns driving much of the slide.Small-cap General Motors was the second-worst performer on the Dow as worries continued over the company's latest recovery plan won't work.Still, despite the broad indexes' moves below November levels, other market indicators have not followedsuit. Notably, the CBOE Market Volatility Index closed up 4.9% at 49.37, well off its November highsYou can use this link on the day this article is published and the following day.-0-Copyright (c) 2009 Dow Jones & Company, Inc.
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