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Stocks mostly fall on bank ratings, FedEx warning
Source: Agencies |
June 18, 2009, Thursday
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Online Edition
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A CAUTIOUS forecast from FedEx Corp. and a ratings downgrade of 18 banks gave investors new reasons to worry about the economy.
Stocks mostly fell yesterday, though health and technology stocks posted gains after a widespread slide in stocks earlier in the week.
The Dow Jones industrial average fell 7.49, or 0.1 percent, to 8,497.18 after moving in and out of positive territory during the day. The broader S&P 500 index fell 1.26, or 0.1 percent, to 910.71, and the Nasdaq composite index rose 11.88, or 0.7 percent, to 1,808.06.
FedEx issued a weak profit forecast and downbeat comments about the economy. Analysts look to shipping companies' business as a gauge of the economy's strength.
Financial stocks saw some of the biggest losses after Standard & Poor's cut its ratings and revised outlooks on big banks. S&P cited concerns that the financial industry will remain volatile and that banks are expected to face tighter regulatory oversight.
In a bright spot, consumer prices rose less than forecast in May. Investors have been worrying that rising prices would threaten a recovery in the economy by curbing demand.
Trading is likely to remain choppy ahead of Friday's quarterly "quadruple witching" day, which marks the simultaneous expiration of a number of different options contracts. Dan Deming, a trader with Strutland Equities in Chicago, said stocks are more likely to gain ground during such times.
The drop in stocks this week comes after stocks notched only modest gains last week. The selling has inserted a break into a three-month rally that had carried the S&P 500 index up 40 percent from 12-year lows. Many traders say expectations for an economic recovery had been too rosy.
Richard Hughes, co-president of Portfolio Management Consultants, said the market had gotten ahead of itself during the spring rally and that the economy remains weak.
"People are taking a pause and it makes sense," he said.
BB&T Corp. and Wells Fargo & Co. were among the biggest banks hit with lower ratings. BB&T fell 65 cents, or 2.9 percent, to US$21.58, while Wells Fargo slid US$1.31, or 5.4 percent, to US$23.09.
The KBW Bank index, which tracks 24 of the nation's largest banks, fell 3.3 percent.
In other trading, bond prices mostly rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.60 percent from 3.65 percent late Tuesday.
Stocks mostly fell yesterday, though health and technology stocks posted gains after a widespread slide in stocks earlier in the week.
The Dow Jones industrial average fell 7.49, or 0.1 percent, to 8,497.18 after moving in and out of positive territory during the day. The broader S&P 500 index fell 1.26, or 0.1 percent, to 910.71, and the Nasdaq composite index rose 11.88, or 0.7 percent, to 1,808.06.
FedEx issued a weak profit forecast and downbeat comments about the economy. Analysts look to shipping companies' business as a gauge of the economy's strength.
Financial stocks saw some of the biggest losses after Standard & Poor's cut its ratings and revised outlooks on big banks. S&P cited concerns that the financial industry will remain volatile and that banks are expected to face tighter regulatory oversight.
In a bright spot, consumer prices rose less than forecast in May. Investors have been worrying that rising prices would threaten a recovery in the economy by curbing demand.
Trading is likely to remain choppy ahead of Friday's quarterly "quadruple witching" day, which marks the simultaneous expiration of a number of different options contracts. Dan Deming, a trader with Strutland Equities in Chicago, said stocks are more likely to gain ground during such times.
The drop in stocks this week comes after stocks notched only modest gains last week. The selling has inserted a break into a three-month rally that had carried the S&P 500 index up 40 percent from 12-year lows. Many traders say expectations for an economic recovery had been too rosy.
Richard Hughes, co-president of Portfolio Management Consultants, said the market had gotten ahead of itself during the spring rally and that the economy remains weak.
"People are taking a pause and it makes sense," he said.
BB&T Corp. and Wells Fargo & Co. were among the biggest banks hit with lower ratings. BB&T fell 65 cents, or 2.9 percent, to US$21.58, while Wells Fargo slid US$1.31, or 5.4 percent, to US$23.09.
The KBW Bank index, which tracks 24 of the nation's largest banks, fell 3.3 percent.
In other trading, bond prices mostly rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.60 percent from 3.65 percent late Tuesday.
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