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Stocks give up advance as financial stocks slide
Source: Agencies |
January 27, 2010, Wednesday
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STOCKS gave up a healthy advance and closed slightly lower yesterday as investors suffered another bout of anxiety over President Barack Obama's plan to regulate banks.
The Dow Jones industrial average, up 90 points in the early afternoon, closed with a loss of 2.57. The other major indexes were also down modestly.
Uneasiness about Obama's plan to limit the size and trading operations of big banks pulled financial stocks and then the entire market lower. News reports that Paul Volcker, the head of the President's Economic Recovery Advisory Board, would testify about the plan before Congress next week, contributed to the market's turnaround.
The drop was the market's fifth in seven days, and the fact that it came shortly before the closing bell showed how uneasy investors are; last-hour pullbacks were the hallmark of a troubled market during the financial crisis of 2008.
Obama's announcement of his plan last week helped give the market its worst week in 10 months. Traders said some investors had started to regard the proposals as political bluster before the latest reports dashed those hopes.
"There is maybe more than just a bark. Maybe this thing does have a bite," said Dan Deming, a trader with Stutland Equities in Chicago.
Even banks seen as strong like JPMorgan Chase & Co. and Goldman Sachs Group Inc. fell sharply.
The market had climbed most of the day on upbeat economic and corporate earnings news. The Conference Board said its index of consumer confidence rose to 55.9 in January from 53.6 in December. It was the third straight increase and the highest level in more than a year.
And insurer Travelers Cos. said an absence of catastrophe costs and a recovery in its investment portfolios lifted profits 60 percent for the final three months of 2009.
The Dow fell 2.57, or less than 0.1 percent, to 10,194.29. The Standard & Poor's 500 index slid 4.61, or 0.4 percent, to 1,092.17. The Nasdaq composite index dropped 7.07, or 0.3 percent, to 2,203.73.
Two stocks fell for every one that rose on the New York Stock Exchange. Volume was 1.1 billion shares, in line with Monday.
The day began with a bout of selling as China moved ahead with a plan to curb bank lending. Investors in the U.S. and elsewhere are concerned a slowdown in China's big economy could destabilize a worldwide recovery.
The drop yesterday came as Federal Reserve policymakers began a two-day meeting on interest rate policy. The central bank is expected to keep rates at record lows, though investors will be looking at the Fed's assessment of the economy in a statement that will follow the meeting on Wednesday.
Investors today also will be awaiting Obama's first State of the Union address.
Stocks broke a three-day slide Monday as Fed Chairman Ben Bernanke's prospects for confirmation to another four-year term brightened. His term ends Sunday. Doubts last week about his ability to get confirmed in the Senate, combined with the White House's latest drive to clamp down on U.S. banks, led to the big drop in the market from Wednesday through Friday.
The dollar rose against other major currencies yesterday, while gold advanced.
Crude oil fell 55 cents to US$74.71 per barrel on the New York Mercantile Exchange.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.63 percent from late Monday.
Dow component Travelers rose US$1.34, or 2.7 percent, to US$50.23 after its report.
Apple Inc. rose US$3.07, or 1.5 percent, to US$205.94 after posting a profit increase late Monday.
The Russell 2000 index of smaller companies fell 5.95, or 1 percent, to 612.16.
Asian markets fell as concerns rose about Japan's economy hurting the country's bond rating. Standard & Poor's lowered its outlook on Japan's credit rating to negative from stable, saying it would slash the country's long-term rating if its economy remains weak and debt stays high.
The Dow Jones industrial average, up 90 points in the early afternoon, closed with a loss of 2.57. The other major indexes were also down modestly.
Uneasiness about Obama's plan to limit the size and trading operations of big banks pulled financial stocks and then the entire market lower. News reports that Paul Volcker, the head of the President's Economic Recovery Advisory Board, would testify about the plan before Congress next week, contributed to the market's turnaround.
The drop was the market's fifth in seven days, and the fact that it came shortly before the closing bell showed how uneasy investors are; last-hour pullbacks were the hallmark of a troubled market during the financial crisis of 2008.
Obama's announcement of his plan last week helped give the market its worst week in 10 months. Traders said some investors had started to regard the proposals as political bluster before the latest reports dashed those hopes.
"There is maybe more than just a bark. Maybe this thing does have a bite," said Dan Deming, a trader with Stutland Equities in Chicago.
Even banks seen as strong like JPMorgan Chase & Co. and Goldman Sachs Group Inc. fell sharply.
The market had climbed most of the day on upbeat economic and corporate earnings news. The Conference Board said its index of consumer confidence rose to 55.9 in January from 53.6 in December. It was the third straight increase and the highest level in more than a year.
And insurer Travelers Cos. said an absence of catastrophe costs and a recovery in its investment portfolios lifted profits 60 percent for the final three months of 2009.
The Dow fell 2.57, or less than 0.1 percent, to 10,194.29. The Standard & Poor's 500 index slid 4.61, or 0.4 percent, to 1,092.17. The Nasdaq composite index dropped 7.07, or 0.3 percent, to 2,203.73.
Two stocks fell for every one that rose on the New York Stock Exchange. Volume was 1.1 billion shares, in line with Monday.
The day began with a bout of selling as China moved ahead with a plan to curb bank lending. Investors in the U.S. and elsewhere are concerned a slowdown in China's big economy could destabilize a worldwide recovery.
The drop yesterday came as Federal Reserve policymakers began a two-day meeting on interest rate policy. The central bank is expected to keep rates at record lows, though investors will be looking at the Fed's assessment of the economy in a statement that will follow the meeting on Wednesday.
Investors today also will be awaiting Obama's first State of the Union address.
Stocks broke a three-day slide Monday as Fed Chairman Ben Bernanke's prospects for confirmation to another four-year term brightened. His term ends Sunday. Doubts last week about his ability to get confirmed in the Senate, combined with the White House's latest drive to clamp down on U.S. banks, led to the big drop in the market from Wednesday through Friday.
The dollar rose against other major currencies yesterday, while gold advanced.
Crude oil fell 55 cents to US$74.71 per barrel on the New York Mercantile Exchange.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.63 percent from late Monday.
Dow component Travelers rose US$1.34, or 2.7 percent, to US$50.23 after its report.
Apple Inc. rose US$3.07, or 1.5 percent, to US$205.94 after posting a profit increase late Monday.
The Russell 2000 index of smaller companies fell 5.95, or 1 percent, to 612.16.
Asian markets fell as concerns rose about Japan's economy hurting the country's bond rating. Standard & Poor's lowered its outlook on Japan's credit rating to negative from stable, saying it would slash the country's long-term rating if its economy remains weak and debt stays high.
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