US Stocks Close Lower On Broad Losses; DJIA Down 251

NEW YORK (MarketWatch) -- U.S. stocks plunged to their lowest levels in nearly 12 years as risk aversion and the weight of a global recession sparked a broad-based decline led by industrial heavyweights such as General Electric and Alcoa.

After a bank-led 485-point slide last week sent the Dow to new bear market lows, a more broad selloff Monday pushed the index even lower Monday. Setting off the declines was a drop of 48 cents, or 7.6%, to 5.81, for Alcoa, and 53 cents, or 5.7%, to 8.85, for General Electric.

For GE, traders continue to view the industrial conglomerate as basically a financial firm, with a Deutsche Bank analyst saying there's a growing risk that GE will have to cut its dividend to support its GE Capital unit. For banks, and all of the companies that rely on the credit markets to sustain growth, a continued fear about what still remains on corporate balance sheets reigns.

"Where there has been smoke so far, there has eventually been fire every time," said David Klaskin, chief investment officer for Oak Ridge Investments in Chicago.

Overall, the Dow closed down 250.89 points, or 3.41%, to 7114.78, marking its lowest closing point since May 7, 1997. In 10 sessions, the Dow has lost more than 14% and is down 19% for the year.

Former Dow-component American International Group also weighed on the broad indexes, with CNBC reporting that AIG is in talks with the U.S. government about securing more funds to be able to continue operating after March 2. Traders say any move to help the giant insurer could delay government officials from more pressing issues within the economy and banking system.

AIG, now a small-cap, closed down a penny, or 1.9%, at 53 cents.

The Standard & Poor's 500 slid 26.72, or 3.47%, to 743.33, marking an 11-year closing low and passing through its closing low of 752.44 made in November. Though the tech-heavy Nasdaq Composite declined more than the other broad indices, off 53.51, or 3.71%, to 1387.72, it remains up more than 5% from its November closing lows.

It was notable the financial sector didn't take part in the broad market declines as talk of an expanded U.S. government stake in Citigroup prompted some gains for banks. Citigroup shares rose 19 cents, or 9.7%, to 2.14. Bank of America, which has also been subject to speculation about a possible government takeover, gained 12 cents, or 3.2%, to 3.91.

But traders note a heavy reliance on Washington isn't healthy for banking stocks long-term. And the broad stock declines have fed into the same level of concern from investors in late 2008, when money managers said many of their clients were increasingly asking for the safest route possible.

"People are totally risk averse to anything right now. They're backing off any asset allocation and just getting out as it's going to take a while before any stimulus money moves in," said Thomas Nyheim, a portfolio manager with Christiana Bank & Trust.

Elsewhere among banking stocks, Royal Bank of Scotland gained 29 cents, or 5.2%, to 5.83, after reports that it would follow in Citigroup's footsteps with a breakup in which it would hive off assets it plans to sell.

However, UBS and other Swiss banks dropped on continued worries about their investment-banking operations. UBS closed down 1.32, or 14%, at 8.39.

Shares of managed-care providers dropped sharply Monday after the Centers for Medicare and Medicaid Services said Friday private Medicare plans would see a modest 0.5% increase in the 2010 fiscal year under tentative projections, a growth rate that would come in well below some analysts' expectations. Shares of UnitedHealth Group declined 4.16, or 15%, to 23.82 and Humana fell 9.71, or 24%, to 30.83.

Ford Motor gained 15 cents, or 9.5%, to 1.73 as the car maker reached a tentative deal over unionized retiree health benefits Monday, increasing the chances that General Motors and Chrysler can secure their own concessions. GM closed unchanged at 1.77.

On the earnings front, Campbell Soup reported a 15% decline in fiscal second-quarter net income on falling volume and the stronger dollar. The soup maker closed down 82 cents, or 2.8%, at 28.63.

Garmin gained 1.11, or 7.3%, to 16.28 on Nasdaq. The maker of global positioning systems' fiscal fourth-quarter net income dropped 49% on falling sales and margins.

Fitch Ratings further downgraded the credit ratings of Mexican cement maker Cemex SAB, off 36 cents, or 6%, to 5.64, citing concerns about the company's level of debt.

*Courtesy of MarketWatch

DowJones 60m.chart (23.02.2009)

*as I mention last saturday, DJ going SOUTH because of the last 2 Friday inverted hammer & last night DJ drops nearer to 7,000 level. This level should be a short term support level for DJ.

Major stock market indexes fall to 1997 levels

Dow, S&P 500 fall to 1997 levels as sagging confidence pulls stocks lower; Dow falls 251

NEW YORK (AP) -- Wall Street has turned the clock back to 1997. Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.

All the major indexes slid more than 3 percent. The Dow is just over 100 points from 7,000.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.

Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.

"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."

The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.

"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."

Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.

"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.

The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. The major indexes plunged through the lows they reached in late November, at the height of the credit crisis.

"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."

According to preliminary calculations, the Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on Oct. 28, 1997 when it finished at 6,971.32. The Dow hasn't traded below the 7,000 mark since October 1997.

The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.

The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.

The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.

Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with heavy volume of 2.12 billion shares on Friday.

Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.

Other big decliners included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.

Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28 percent from 0.26 percent Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.

*Courtesy of Yahoo! Finance