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Wall Street slides after Citigroup-government deal
Source: Agencies |
February 28, 2009, Saturday
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Online Edition
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WALL Street ended another unforgiving month with a steep loss as Citigroup Inc. and General Electric Co. both unsettled investors.
Citigroup plans to turn over a big piece of itself to the government, a move that fanned worries that other banks would face crippling trouble with bad debt. And GE slashed its quarterly dividend by 68 percent. Both companies are part of the Dow Jones industrial average.
Stocks closed off their lows of the day, but still had big losses as the market had its sixth straight losing month. The Dow and the Standard & Poor's 500 index each shed more than 10 percent in February.
Citigroup said before the opening bell that it had agreed to a deal in which the US government and private investors including the government of Singapore and Saudi Arabian Prince Alwaleed Bin Talal will convert their preferred stock in the struggling bank to common shares. The plan won't require additional money from the US government, which holds an 8 percent stake in Citigroup and would own 36 percent.
GE said late in the session it would cut its dividend to US$9 billion a year. The conglomerate has a big financing arm, so it often trades like a bank stock.
Both moves made the stocks less attractive to investors and they pulled finanicals and the rest of the market lower.
The Dow fell 119.15, or 1.7 percent, to 7,062.93. The blue chips fell as much as 149 points to near the 7,000 mark, a level they haven't moved below since October 1997.
Broader stock indicators also dropped. The S&P 500 index fell 17.74, or 2.4 percent, to 735.09. The index breached its Nov. 21 trading low of 741.02, which came during the height of the credit crisis. Investors had hoped the November low would mark the bottom of the market's fall from October 2007.
The Nasdaq composite index fell 13.63, or 1 percent, to 1,377.84.
The major indexes haven't had a winning month since August.
The Russell 2000 index of smaller companies fell 3.93, or 1 percent, to 389.02.
Two stocks fell for every one that advanced on the New York Stock Exchange. Volume came to a heavy 2.25 billion shares.
Citigroup plans to turn over a big piece of itself to the government, a move that fanned worries that other banks would face crippling trouble with bad debt. And GE slashed its quarterly dividend by 68 percent. Both companies are part of the Dow Jones industrial average.
Stocks closed off their lows of the day, but still had big losses as the market had its sixth straight losing month. The Dow and the Standard & Poor's 500 index each shed more than 10 percent in February.
Citigroup said before the opening bell that it had agreed to a deal in which the US government and private investors including the government of Singapore and Saudi Arabian Prince Alwaleed Bin Talal will convert their preferred stock in the struggling bank to common shares. The plan won't require additional money from the US government, which holds an 8 percent stake in Citigroup and would own 36 percent.
GE said late in the session it would cut its dividend to US$9 billion a year. The conglomerate has a big financing arm, so it often trades like a bank stock.
Both moves made the stocks less attractive to investors and they pulled finanicals and the rest of the market lower.
The Dow fell 119.15, or 1.7 percent, to 7,062.93. The blue chips fell as much as 149 points to near the 7,000 mark, a level they haven't moved below since October 1997.
Broader stock indicators also dropped. The S&P 500 index fell 17.74, or 2.4 percent, to 735.09. The index breached its Nov. 21 trading low of 741.02, which came during the height of the credit crisis. Investors had hoped the November low would mark the bottom of the market's fall from October 2007.
The Nasdaq composite index fell 13.63, or 1 percent, to 1,377.84.
The major indexes haven't had a winning month since August.
The Russell 2000 index of smaller companies fell 3.93, or 1 percent, to 389.02.
Two stocks fell for every one that advanced on the New York Stock Exchange. Volume came to a heavy 2.25 billion shares.
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