Shares Fall Overall, but Financial, Auto Sectors Show Some Strength
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Tuesday, March 10, 2009
Stocks fell yesterday despite gains in shares of financial and automotive companies as investors showed hope that the government was poised to provide huge sums for consumer loans.
The Dow Jones industrial average closed down 79.89, or 1.2 percent, at 6547.05. The Standard & Poor's 500-stock index fell 6.85, or 1 percent, to 676.53, and the Nasdaq composite index dropped 25.21, or 1.9 percent, to 1268.64.
The battered financial sector showed the strongest gains. Bank of America rose more than 19 percent, to close at $3.75, while Wells Fargo gained nearly 16 percent, to $9.97.
Some analysts said they think investors are responding to the Federal Reserve's plan, to be launched later this month, to provide $1 trillion for financial services and automobile companies to revive the consumer credit market.
"Interest rate sectors are doing well today," said Tom Sowanick, chief investment officer for Clearbrook Financial in Princeton, N.J. "The Federal Reserve's TALF program is reflected in the better performance of financials today."
The auto sector also recouped some of its recent losses. Shares of Ford rose 4 cents, or more than 2 percent, to $1.74, after the company announced that its union workforce had approved an agreement aimed at lowering health-care costs. GM shares rose nearly 16 percent after the company said its German unit, Opel, was not planning to file for bankruptcy protection.
However, the announcement of a major pharmaceutical industry merger, the second in two months, failed to lift shares. Merck fell 7.7 percent after it said it would acquire Schering-Plough for $41.1 billion in cash and stock.
Growing concern about a deepening global downturn continued to weigh on investors after the World Bank said Sunday that the recession is engulfing developing nations, threatening to reverse years of efforts to reduce poverty.
Japan's benchmark Nikkei stock average closed at a 26-year low Monday after the government announced that plunging exports had driven the Japanese current account deficit to a record high. Bankruptcies in Japan were up 10 percent in February, rising for the ninth consecutive month, the government reported.
In London, the FTSE was up 0.3 percent, and Germany's DAX rose 0.7 percent.
Meanwhile, crude oil rose $1.73 to settle at $47.25 a barrel on the New York Mercantile Exchange.
