-
Bank Notes | College Planning | Debt | Elder Care | Employment | Estate Planning | Health Care | Insurance | Marriage & Divorce | Real Estate | Retirement | Taxes
-
Market Update
Stocks Ride Out Rocky Trading Session
News at a Glance
- Roller Coaster Ride: After erasing gains, stocks lose steam in afternoon trading and finish lower.
- Rescue Plan: Citigroup signs new deal with the federal government.
- Shrinking Economy: The Bureau of Economic Analysis says GDP decreased 6.2% in the fourth quarter.
- Paring Payouts: General Electric cuts its dividend.
The Lowdown
U.S. stocks endured a roller coaster session Friday, bringing to a close a volatile month. After erasing earlier losses, the Dow Jones Industrial Average fell once again in afternoon trading. Weighing on trading was a new Citigroup (C) deal with the government, a GDP figure that was worse that expected and poor earnings.
Overseas, Europe and some Asia markets dipped over similar concerns about the banking industry. Lloyds announced a 75% drop in net profit, a dismal revelation that follows news earlier in the week that Royal Bank of Scotland (RBS) would post the largest loss in U.K. corporate history.
Citi announced it had reached a new deal with the government. The financial services giant, which has already received close to $50 billion in bailout funds, said the government and other private investors would convert preferred shares into common. The end result means existing common shareholders will be massively diluted as the federal government takes as much as a 36% stake in the company, making it the largest shareholder. In order to get the deal done, Citi had to agree to revamp its board of directors with more independent members. However, it appears CEO Vikram Pandit will keep his job.
The Dow Jones Industrial Average lost 119 points to 7062 after posting a slight gain at 2 p.m. The S&P 500 slipped 17 to 735. The Nasdaq dropped 13 to 1377. Overseas, the FTSE 100 dipped 85 to 3830. The CAC 40 dropped 42 to 2702. In Asia, stocks were mixed. Japan's industrial production plunged 10%, the largest decline since the country started compiling the figure in 1953. Nevertheless, traders did some bargain shopping. The Nikkei 225 gained 110 to 7568. However, the Shanghai Composite decreased 38 to 2082.
Stocks are set to close a raucous week. In each of the previous four sessions the Dow Jones Industrial Average has swung through triple-digit increases and decreases. There was plenty for traders to digest, from a new $3.6 trillion White House budget and further insights into the Treasury's plan for "stress testing" ailing banks to a wealth of (mostly bad) earnings reports. The Dow opened the week at 7365. At Friday's opening bell it is sitting about 180 points below that mark.
The FBI reportedly arrested the chief financial officer of Stanford Financial Group. The company, controlled by billionaire R. Allen Stanford, is accused of an $8 billion financial scheme. The FBI accused the CIO, Laura Pendergrast-Holt, of obstruction of justice.
In the energy markets, oil was lower after some profit taking from Thursday's gains. Yesterday crude jumped over rumors OPEC may cut production and a weekly inventory figure that showed demand may be increasing. Oil lost 92 cents to $44.30
Corporate News
- General Electric is reportedly slashing its dividend by 68%, to 10 cents a share from 31 cents beginning in its third quarter, says CNBC. The move could save General Electric (GE) company $9 billion a year.
- Fannie Mae (FNM), one of the world's largest buyers of mortgages and a key recipient of government aid, is reportedly asking the government for more cash. Reports say Fannie could be looking for an additional $15.2 billion to help it overcome an increase in home loan defaults.
- Fannie Mae (FNM), one of the world's largest buyers of mortgages and a key recipient of government aid, is reportedly asking the government for more cash. Reports say Fannie could be looking for an additional $15.2 billion to help it overcome an increase in home loan defaults.
- Bank Of America (BAC) CEO Ken Lewis answered questions Thursday night from the New York Attorney General's office about the bonuses paid out to Merrill Lynch executives shortly before that company was sold to BofA. Lewis said he answered as many questions as he could, but he refused to give lawyers a list of Merrill executives who got $3.6 billion in bonuses.
- After the close of the market Thursday Dell said its profit dipped 48% during its fourth quarter, as businesses and consumers alike shun pricey computer purchases amid a sluggish economy. Earnings sank to $351 million, or 18 cents a share, compared to $679 million, or 31 cents a share, during the same period last year.
The Economy
- The Bureau of Economic Analysis said Friday that gross domestic product -- the output of goods and services produced by labor and property in the U.S. -- decreased at an annual rate of 6.2% in the fourth quarter of 2008. Real GDP had decreased 0.5% in the previous quarter. That fourth quarter tally is worse than the 5.4% experts were expecting.
- The FDIC announced its so-called "bad bank" list, which includes institutions in danger of failing, increased 47% in the fourth quarter and now includes 252 firms that hold $159 billion in assets. The agency also revealed the banking industry lost $26.2 billion in the fourth quarter.
ReadMe
- Forbes on Web Navigation: Several big name players are set to shake up the web browser business. STORY
- New York Times on President Politics: President Obama became a pop culture icon when an illustrator put him on a poster. Now Lincoln is getting the same treatment. STORY
WatchMe
- CNBC on GM: Can the struggling auto maker make a comeback? CNBC asks a former vice chairman of Chrysler. VIDEO
Order Reprints
-0.06
About Our Ads | Corrections | Custom Publishing | License Our Content | Media Kit | Press Room | Events | Site Map | Labs |
You Are Viewing: SmartMoney.com — Investing, Saving and Personal Finance.
