Wall Street has its worst week in a year
Saturday, January 23, 2010
Wall Street tumbled to its biggest weekly loss in nearly a year Friday as concerns about proposed bank regulations continued to weigh on that sector.
All of the major indexes fell at least 2 percent Friday, and there were significant losses in financial stocks. Bank of America and Goldman Sachs were down 3.7 percent and 4.2 percent, respectively. American Express's stock fell 8 percent even after the financial giant reported Thursday that its fourth-quarter net income had more than doubled to $716 million.
Stocks spent most of the day in negative territory as investors fretted over a White House plan to restrict the growth of the nation's largest banks and digested lackluster earnings reports, analysts said. But the losses accelerated in the afternoon when some Democratic lawmakers said they would not support another term for Ben S. Bernanke as chairman of the Federal Reserve. The new uncertainty about whether Bernanke, whose term expires at the end of the month, will keep his job added to investors' concerns, analysts said.
"I think between the president's commentary about increased regulation over the financial services industry and the uncertainty about whether Bernanke will be confirmed, that provided a lot of challenges to the market this week. That sort of intimidated investors," said Andrew M. Brooks, vice president and head of U.S. equity trading at T. Rowe Price.
In addition to the events in Washington, some analysts have been warning that the markets were due for a correction, given the uncertainty about the strength of the economy recovery.
The Dow Jones industrial average fell 2.1 percent, or 216.90 points, to close at 10,172.98. That capped the biggest three-day point slide in the blue-chip index since November 2008 and the worst weekly loss since February 2009. The broader Standard & Poor's 500-stock index fell 2.2 percent, or 24.72 points, to 1091.76. Both indexes fell about 4 percent for the week.
The tech-heavy Nasdaq composite index took the biggest hit Friday, falling 2.7 percent, or 60.41 points, to 2205.29. It was dragged down by an 6 percent drop in Google's stock price. The Internet firm's fourth-quarter profit, $1.97 billion, disappointed analysts who expected better results. The index was down about 3.6 percent for the week.