Pressured on Several Fronts, Stocks Fall
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U.S. stocks posted the biggest weekly decline in three months after American International Group reported a $61.7 billion loss, Warren Buffett said the economy is in "shambles" and General Electric faced increased concerns that it will be stripped of its top credit rating.
The Standard & Poor's 500-stock index rebounded from a 12-year low by rallying in the final hour of trading Friday. U.S. Bancorp and PNC Financial Services Group sank more than 32 percent after cutting their dividends. AIG slid 17 percent following its loss, the biggest in U.S. history. GE slumped 17 percent.
"It's really scary," said Kevin Rendino, a fund manager at BlackRock. "The market's not going anywhere until I come into my office and don't worry whether General Electric is a viable entity."
The S&P 500 retreated 7 percent, to 683.38. The Dow Jones industrial average fell 435.99 points, or 6.2 percent, to 6626.94. The Nasdaq decreased 6.1 percent, to 1293.85.
Citigroup shares fell as low as 97 cents in Thursday trading. Federal Reserve Chairman Ben S. Bernanke told Congress last week that the government may have to expand its rescue of the banking system. Financial firms worldwide have reported losses and write-downs exceeding $1.2 trillion since the start of 2007.
The Dow and the S&P fell to 12-year lows Friday, extending a rout that has erased more than $10 trillion from U.S. equity markets over 17 months. Speculation that banks face credit downgrades and that China won't add to stimulus measures left stocks lower for a fourth week.
The Dow average on Friday twice rallied more than 150 points within an hour. A government report showing U.S. employers cut fewer jobs last month than in January spurred a 160-point rally just after trading opened, but the gain was erased by a lower sales forecast for Apple. The blue chip average rebounded again prior to the close after oil climbed more than $2 in the final hour of pit trading.
Treasury 10-year notes posted the biggest weekly gain this year as a plunge in stocks on concern over the financial system's stability drove investors to the relative safety of U.S. debt. The yield, which moves inversely to price, fell to 2.88 percent from 3.02 percent.
The Treasury will auction $31 billion of three-month bills and $30 billion of six-month bills tomorrow. They yielded 0.2 percent and 0.39 percent, respectively, in when-issued trading. One-month bills will be sold Tuesday.
-- Bloomberg News
