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Business

After a disastrous Monday, Wall Street refuses to bounce back

©

Latest update : 2009-03-04

Wall Street limped to a lower finish Tuesday, although it saw less of a slide than in Europe, as investors mulled the extent of the economic gloom a day after a global rout that sent key US indexes to fresh 12-year lows.

AFP - Wall Street limped to a lower finish Tuesday as investors mulled the extent of the economic gloom a day after a global rout that sent key US indexes to fresh 12-year lows.
   
The Dow Jones Industrial Average erased early gains and fell 37.27 points (0.55 percent) to end at 6,726.02, extending losses a day after the blue-chip index hit its lowest close since 1997.
   
The Nasdaq composite shed 1.84 points (0.14 percent) at 1,321.01 and the broad Standard & Poor's 500 index dropped 4.49 points (0.64 percent) to 696.33, its weakest level since late 1996.
   
The market showed a positive early reaction to the launch of a new effort by the Federal Reserve and the Treasury to boost consumer lending with 200 billion dollars to buy up securities linked to various types of loans and credit cards.
   
But some said Federal Reserve chairman Ben Bernanke's comments in Congress indicated the banking system is not yet on the mend.
   
"The morning strength was deemed as a mere opportunity to sell," said Jon Ogg at 24/7 Wall Street. "Ben Bernanke tried to calm the markets, but his comments only helped to add salt to the wounds."
   
Patrick O'Hare at Briefing.com said the selling may have been overdone.
   
"Granted the facts indicate there is much to bemoan, but it is at times like this, when it seems everything is communicated in the worst light possible, that countertrend rallies in the stock market develop," he said.
   
"This isn't to say that it is off to the races from here, only that the opportunity for a meaningful bounce from an oversold market is picking up along with the amplitude of negativity that is being heard on TV or written about in the newspapers."
   
On the economic front, data showed US pending home sales plummeted 7.7 percent in January from the prior month to their lowest level in at least eight years as a deepening recession bites.
   
But despite the weak economic backdrop, Bernanke told lawmakers that various rescue and stimulus programs in place should eventually lift the recession-plagued economy.
   
"Although the near-term outlook for the economy is weak, over time, a number of factors should promote the return of solid gains in economic activity in the context of low and stable inflation," he said in his remarks to Congress.
   
Financial shares were mainly higher after horrific losses Monday after a record loss at insurance giant AIG prompted a new government rescue of 30 billion dollars.
   
AIG shares rose 2.38 percent to 43 cents, while Citigroup -- another recipient of a revamped bailout -- added 1.67 percent to 1.22 dollars.
   
Bank of America increased 0.55 percent to 3.65 dollars despite a downgrade by Standard & Poor's while JPMorgan Chase fell 0.71 percent to 21.01.
   
Automakers were also in focus as they released monthly sales reports. General Motors fell 1.0 percent to 1.99 dollars as it reported a 53 percent plunge from a year ago in February sales. Ford slipped 3.72 percent to 1.81 dollars after reporting a 48 percent drop.
   
Bonds fell following a surge on Monday. The yield on the 10-year US Treasury bond rose to 2.938 percent from 2.919 percent Monday while that on the 30-year bond climbed to 3.676 percent against 3.649 percent. Bond yields and prices move in opposite directions.
   
Around the world, jittery global stock markets lost more ground, still unsettled by fears for the world financial system and the ability of governments to overcome a deepening recession.
   
European exchanges earlier closed lower, with the London's FTSE 100 index of leading shares shedding 3.14 percent to finish at a six-year low.
   
In Paris, the CAC 40 fell 1.04 percent and in Frankfurt the Dax lost 0.52 percent.
   
Toronto's S&P/TSX index lost 0.73 percent after Canada's central bank cut interest rates to a record low of 0.5 percent and issued a downbeat outlook.
   
Brazil's Bovespa index bucked the trend, rising 0.64 percent.

Date created : 2009-03-03

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