U.S. Stocks Fall After Week of Gains
Monday, May 11, 2009; 4:37 PM
Investors held back today, sending U.S. stock markets down after last week's big gains.
The blue-chip Dow Jones industrial average closed down 1.8 percent, or 156 points, to 8419, while the broad Standard & Poor's 500-stock index was down 2.2 percent, or 20 points, to 909. The tech-heavy Nasdaq fell 0.5 percent, or 8 points, to 1731.
Financial stocks were once again big movers, down 3.8 percent. This morning, U.S. Bancorp, Capital One Financial and BB&T announced large common stock offerings to help repay the government for money they had received through the federal bailout program. Shares of all three banks fell on the news, with U.S. Bancorp down 9.9 percent to $18.50, Capital One dropping 13.5 percent to $27.10, and BB&T dipping 7.6 percent to $24.34.
Bank stocks shot up nearly 13 percent last week after the federal government announced that nearly all of the country's major banks have enough capital to weather the recession. That helped drive the S&P to erase its year-to-date loss. This morning, investors seemed to be locking in those profits.
But Todd McCallister, a managing director at Eagle Asset Management, cautioned that the results of the stress tests do not signal the end of banks' strife.
"I don't think this is the end of the financial issues," he said. "I'd be very careful chasing strong rallies."
Energy and transportation stocks also fell, off 3 percent and 3.6 percent, respectively, after rallying last week on hopes that the downturn was stabilizing. Crude oil for June delivery fell slightly, 0.2 percent, or 13 cents, to $58.50 a barrel on the New York Mercantile Exchange.
This week investors are awaiting retail sales figures from the Commerce Department and earnings results from major retailers that will offer a glimpse into consumers' mindsets. Monthly sales results from a handful of chain stores released last week were a mixed bag, with discounters such as Target and Wal-Mart besting expectations but department stores still suffering steep declines.