Stocks Eke Out Second Week of Gains

Stocks tumbled yesterday as investor confidence in bank stocks waned, but Wall Street still closed the week in positive territory.

The Dow Jones industrial average, the index of blue-chip stocks, fell 1.7 percent, or 122.42 points, to 7278.38. The broader Standard & Poor's 500-stock index was down nearly 2 percent, or 15.50 points, to 768.54. The tech-heavy Nasdaq composite index fell 1.8 percent, or 26.21 points, to 1457.27.

The Dow and S&P 500 were up 0.8 percent and 1.6 percent respectively this week, while the Nasdaq gained 1.8 percent. This is the first time stocks have had back-to-back positive weeks since May 2008.

"The market is taking a mild breather from our multi-day rally," said Thomas Francis Nordby, a futures strategist for LaSalle Futures in Chicago. "As long as we can maintain 50 percent of our recent rally, I am confident we will see higher highs by early April."

Investors have been clinging to nuggets of positive economic and corporate news to move stocks from their 12-year lows during the last two weeks. Markets rallied earlier this week after the Federal Reserve announced it would pour more than $1 trillion into lowering interest rates and reviving stocks.

But investors soon questioned whether the Fed's efforts could stoke inflation and drag down the dollar. And some analysts have questioned whether the rally is sustainable given the worsening recession, prompting some to lock in profits yesterday. "The problems we have are deep and pronounced," said Kevin Kramer, president of West End Financial Advisors. "These problems don't go away in a day."

Investors' enthusiasm for the financial sector, which has helped lead the recent rally, faded yesterday. Bank of America and J.P. Morgan Chase were down 10.7 percent and 7.2 percent, respectively. Citigroup, the beleaguered bank, bucked the trend, gaining 0.77 percent to close at $2.62 a share after announcing that its chief financial officer, Gary Crittenden, would become chairman of Citi Holdings, which includes some of its most troubled assets.

General Electric tumbled 5.8 percent, to $9.54 a share, after Credit Suisse cut its earnings projections for the company.

But there were also signs that the recession is weighing on corporate balance sheets. Xerox stock dropped 18.7 percent after the company slashed its profit forecast. Shares of Sony and Ericsson fell after their joint venture, Sony Ericsson, announced that "weak consumer demand" would weigh on results. Sony's stock fell 3 percent, to $19.93 a share, while Ericsson tumbled 11 percent, to $8.31 a share.