YAHOO[BRIEFING.COM]: The stock
market was down more than 3% before rallying late in the afternoon as fears for
the banking system were calmed.
Stocks had been under heavy
selling pressure since the start of the session. Weakness was underpinned by
concern that two of the nation's largest financial services companies, Bank
of America (BAC 3.79, -0.14) and Citigroup (C 1.95,
-0.56), may have to be taken over by the government. Though a Bank of America
spokesman defended the company's health, concerns remained as Senator Dodd
suggested that nationalization of a bank may happen.
Shares of C and BAC fell to
new multiyear lows, dragging the financial sector more than 9% lower.
Financials rallied all the way
back into positive ground after word surfaced that the White House believes the
correct way to run the bank system is through private ownership, which likely
helped calm fears of bank nationalization.
There is also speculation
Treasury will soon release further details of its financial stability plan,
though a spokesperson wouldn't comment.
Financial stocks were further
helped by rumor that bank investor JC Flowers is buying preferred shares in big
banks, specifically BAC. BAC was also called one of the best buys ever seen in
the NYSE by an analyst on CNBC.
The positive developments
induced short-sellers to cover their positions, helping the financial sector
turn higher. The broader market rallied in response.
The Dow and the S&P 500
both made their way to the session's unchanged mark, while the Nasdaq turned
positive.
The move proved unsustainable,
though. All three major indices finished with a loss. The Dow set a new
multiyear closing low; the prior closing low was set Thursday.
The Nasdaq Composite incurred
the least severe decline of the headline indices, thanks to support from
large-cap tech names. The strength in large-cap tech helped the Nasdaq 100
finish the session 0.4% higher.
Still, financial stocks
continue to represent the biggest concern for the broader market, and will
continue to do so in the coming week.
Lowe's (LOW 15.86, -1.12) traded lower after
reporting earnings that fell short of estimates, along with downside guidance. JC
Penney (JCP 15.10, +0.08) beat earnings estimates, but forecast a
deeper loss than analysts are projecting. Their reports received little
attention by the broader market.
The January CPI data didn't
contain too many surprises as total CPI was up 0.3%, in-line with expectations,
while core CPI was up 0.2% versus the consensus estimate that called for a 0.1%
increase. Share volume was high this session.
More than 2 billion shares
traded hands on the NYSE this session, but that was largely due to this being an
options expiration day. DJ30 -100.28 NASDAQ -1.59 NQ100 +0.4% R2K -1.4% SP400
-0.8% SP500 -8.89 NASDAQ Dec/Adv/Vol 1924/788/2.15 bln NYSE Dec/Adv/Vol
2341/766/2.12 bln