US Stks Off As DJIA Comes Close To Bear-Market Low By Rob Curran Last update: 5:00 p.m. EST Feb. 17, 2009 (Updates with company information, beginning in the ninth paragraph.) NEW YORK (MarketWatch) -- U.S. stocks fell sharply Tuesday as fears about the solvency of manufacturing giant General Motors and banking giants Citigroup and Bank of America brought the Dow Jones Industrial Average to within a third of a point of a 5 1/2-year closing low. Tuesday, the Dow fell 297.81 points, or 3.79%, to 7552.60, 0.31 points above its close of 7552.29 on Nov. 20, the bear-market nadir. The biggest percentage loser was GM, which closed down 32 cents, or 13%, at $2.18, as investors again feared bankruptcy was in store even as the auto maker prepared to present a recovery plan to Congress. Citigroup fell 43 cents, or 12%, to $3.06, closing within 26 cents of its lowest level of the crisis. Bank of America shed 67 cents, or 12%, to 4.90, $1.13 from its January low. JPMorgan Chase fell 3.04, or 12%, to $21.65. The new administration last week played its ace cards, unveiling its bank rescue plan and passing an economic-stimulus bill. And yet, the banking-system and labor-market fears that have stalked markets since mid-September loom almost as large as they did the day Lehman Brothers Holdings filed for bankruptcy. Fundamentally, "nobody really is confident the government putting in these plans is going to stabilize or help the economy," said William Lefkowitz, chief derivatives strategist at vFinance Investments. "You go to banks, go to autos and you don't really know what government is doing. "The bank details are not coming out for another couple weeks. How long do we have to wait? How bad does it have to get before they actually do something?" The broad Standard & Poor's 500 index fell 37.67, or 4.56%, to 789.17, its first close under 800 since its bear-market nadir of 752 on Nov. 20. The financial sector of the S&P closed down 9.8%. Hartford Financial Group, the life insurer whose soured investments have dogged it for months, fell 2.48, or 20%, to $9.98. Capital One Financial declined 1.98, or 16%, to 10.13 after the credit-card provider said its charge-off rate, or rate of bad-loan write-offs rose to 7.82% on U.S. cards in January. Traders say the broad market will not break its downward spiral until the financial sector does so. That's because a stable banking system is needed to circulate money to the broader economy. Even at their depleted levels, bank and financial stocks make up nearly 10% of the market capitalization of the S&P 500. The technology-oriented Nasdaq Composite fell 63.7, or 4.15%, to 1470.66, turning negative for the month of February. The Nasdaq has held up better than the other two major indexes so far this year and is still 12% above its Nov. 20 low. But traders and brokers warn that the Nasdaq often moves faster than the other two, and its losses could soon catch up. Indeed, the hiding places within the stock market seem to shrink by the day. Google (Nasdaq) fell 15.02, or 4.2%, to 342.66. Brokerage ThinkEquity cut its rating on the search-engine giant, saying a recent run-up in the share price was likely complete for now. Research In Motion (Nasdaq) fell 3.87, or 8%, to 44.64. The BlackBerry maker and four of its executives agreed to settle a stock-options-backdating case with the Securities and Exchange Commission. Some discount stores have fared well so far as shoppers become increasingly conscious of prices. Wal-Mart Stores rose 1.71, or 3.7%, to 48.24. Higher sales, a strong cash position and tight inventory management helped the world's largest retailer exceed estimates with its fiscal fourth-quarter results. Other retailers and supermarkets sold off, however, as analysts assumed that Wal-Mart's gains came at the expense of its rivals. The Consumer Discretionary Select Sector SPDR, a basket of retailers and other consumer stocks, fell 72 cents, or 3.8%, to 18.27. Among supermarkets, Safeway fell 84 cents, or 4.1%, to 19.91. Many medical-device drug stocks are still in the green for 2009. Medtronic rose 1.75, or 5.3%, to 34.56. Fiscal third-quarter profit rose sharply despite declining sales of defibrillators and other technology. American depositary shares of Teva Pharmaceuticals (Nasdaq) added 1.77, or 4%, to 45.78. The Israeli generic-drug maker said fourth-quarter operating earnings exceeded Wall Street estimates, and it boosted its quarterly dividend. -Contact: 201-938-5400 End of Story
