US
US falls sharply
Posted Mon, 16 Feb 2009

US stocks fell sharply on Friday, capping a dismal week, with the financial sector facing fresh pressure after news of mortgage foreclosure freezes by two major banks.

The Dow Jones Industrial Average slid 82.35 points (1.04 percent) to finish at 7850.41, ending with week with a 5.2 percent loss.

The tech-heavy Nasdaq fell 7.35 points (0.48 percent) to 1534.36 and the broad-market Standard & Poor's 500 index retreated 8.35 points (1.00 percent) to 826.84.

Analysts said that trade was thin ahead of the three-day weekend and after a volatile week. Markets will be closed on Monday for the Presidents' Day holiday.

"Most stocks trended lower today, with banking-related issues blazing the trail into the red after Citigroup and JPMorgan Chase agreed to a weeks-long moratorium on foreclosures," said Andrea Kramer at Schaeffer's Investment Research.

The White House announced President Barack Obama would unveil a plan to tackle the home foreclosure crisis on Wednesday. The US housing slump is at the epicentre of the financial system crisis that erupted in August 2007.

Top US banks Citigroup and JPMorgan Chase have imposed moratoriums on home mortgage foreclosures to ease the burden of homeowners amid recession, officials said.

News that the House of Representatives passed a $787-billion stimulus bill that moved to the Senate, where a vote was expected late in the day, faile to lift sentiment, analysts said.

Obama has called the bill "only the beginning" of his efforts to rescue the crippled economy. His Democratic allies powered the bill to a 246-183 House victory without a single Republican vote.

"The soured sentiment toward the banking sector is overshadowing the optimism from the expected passing of the Obama administration's economic stimulus plan today and the possibility the president's team may be considering mortgage subsidies," said analysts at Charles Schwab & Co.

In Europe, official data showed the economy of the nations sharing the euro shrank further in the final quarter of 2008, contracting by a record 1.5 percent, while the full 27-nation European Union's economy also shrank 1.5 percent and slid into recession.

"With statistics like this in mind, and the continued trials facing the US, this weekend's G7 (Group of Seven) finance ministers meeting in Rome promises to offer some lively discussions that should produce a number of talking points for participants come Monday," said Patrick O'Hare at Briefing.com.

A report on consumer confidence rounded out the week's US economic calendar. The University of Michigan said its consumer sentiment index fell to 56.2 points in February from 61.2 points in January. The reading was sharply lower than market expectations of 60.2 points.

Financials took a beating. Embattled blue-chip Dow component Citigroup fell 3.32 percent to 3.49 dollars. JPMorgan Chase tumbled 5.73 percent to 24.69 and Bank of America fell 5.11 percent to 5.57.

Wells Fargo plummeted 6.19 percent to 15.76, after announcing after Thursday's market close that it had to revise lower 2008 net profit.

Among key stocks, Pepsico, the soft drinks and snacks maker, rose 1.10 percent to 52.57 dollars after reporting a 43 percent drop in fourth quarter net profit.

McAfee pared hefty gains to close up 0.50 percent at 30.32. The California computer security firm after the close on Thursday posted a 19 percent rise in fourth-quarter profit on record sales.

Bonds weakened sharply. The yield on the 10-year US Treasury bond vaulted 2.882 percent from 2.727 percent on Thursday and that on the 30-year bond jumped to 3.682 percent from 3.462 percent. Bond yields and prices move in opposite directions.