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Stocks decline as world finance ministers meet

February 14, 2009|Associated Press

NEW YORK — Stocks slumped Friday, giving the Dow industrials a 5.2% loss for the week and their lowest close since November, as investors awaited government action on the economy's problems.

The House passed a $787-billion economic stimulus bill Friday, followed by the Senate later that night. President Obama is expected to sign the bill next week. The White House also said Obama next week would outline steps to stem home foreclosures.

But some investors viewed the stimulus package as too big, while others considered it too small. And investors who had their hopes dashed early this week by Treasury Secretary Timothy F. Geithner also hesitated to get too excited about the announcement on foreclosures.

The bulk of the market's decline this week came Tuesday, when Geithner said he would assess banks' financial health and remove their toxic assets with the help of the private sector -- but provided few details about how the process would work.

"Until we get this clarity, I think it's just stop and go. I don't think we collapse from here, but I don't think we go much higher," said Peter Cardillo, an economist at brokerage Avalon Partners Inc.

Some clues may emerge this weekend at a meeting of Group of 7 finance ministers, who are expected to discuss new financial market rules, protectionist measures in stimulus plans and the effect of the financial crisis on poorer countries.

Friday brought the latest dose of gloomy economic news when the University of Michigan reported that its index of consumer sentiment dropped sharply in February.

The Dow Jones industrial average fell 82.35 points, or 1%, to 7,850.41. It was the lowest close since Nov. 20, when the blue-chip index settled at a multiyear low of 7,552.29.

Broader stock indicators also fell. The Standard & Poor's 500 index lost 8.35 points, or 1%, to 826.84, and the Nasdaq composite index declined 7.35 points, or 0.5%, to 1,534.36.

The Russell 2,000 index of smaller companies fell 0.5%.

For the week, the S&P 500 fell 4.8%, the Nasdaq dropped 3.6% and the Russell 2,000 lost 4.7%.

U.S. financial markets are closed Monday for Presidents Day.

Declining issues outnumbered advancers Friday by about 3 to 2 on the New York Stock Exchange.

Yields on most Treasury securities rose. The benchmark 10-year T-note jumped to 2.88% from 2.72%.

The dollar fell against most other major currencies. Gold prices declined.

Oil futures rebounded from their lowest price this year, climbing $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange.

Among the day's market highlights:

* Shares of Abercrombie & Fitch surged 10% after the clothing retailer posted better-than-expected fourth-quarter results. But the outlook for corporate America remains grim and layoffs keep piling up.

* The U.S.-traded shares of Toyota Motor lost 3%. The Japanese automaker, hurt by poor U.S. sales, said it was cutting production, slashing executive pay by as much as 30% and offering buyouts to about 18,000 workers.

* Overseas, key stock indexes advanced 1% in Japan, 0.1% in Germany and 1.1% in France. A major share index fell 0.3% in Britain.

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