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US stocks fall as world finance ministers meet

US stocks fall as world finance ministers meet
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First Published: Sat, Feb 14 2009. 05 33 AM IST
Updated: Sat, Feb 14 2009. 10 42 AM IST
New York: Investors were holding back on making big bets on stocks until they learn more about government efforts to revive the economy and the struggling financial system.
The US shares slipped on Friday ahead of the long holiday weekend, as finance ministers from the group of seven countries gathered in Rome on Friday to discuss new rules for financial markets and concerns about protectionism in recently announced economic stimulus plans.
Investors are hoping that leaders from the US, Canada, Japan and other industrialized nations will come up with specific proposals for repairing the global financial system.
Earlier this week, Wall Street took a tumble after US treasury secretary Timothy Geithner revealed plans to assess financial institutions’ health and remove their toxic assets with the help of private investors, but gave few details about how the process would work.
“The market is showing signs of wanting to rally,” said Peter Cardillo, chief market economist at Avalon Partners Inc. He pointed to the Dow Jones industrial average’s late-day comeback on Thursday after nearing its November 2008 lows.
Meanwhile, the Obama administration’s $790 billion economic stimulus plan will likely be voted on by the House Friday. It will then go to the Senate.
Investors believe the economy will eventually rebound, but they are unsure how much further it will slide, and which companies will come out on top. A spate of gut-wrenching economic and corporate earnings reports over the past few weeks have left the market deeply unsettled.
On Friday, the University of Michigan delivered the latest dose of poor news, reporting that consumer sentiment dropped sharply in February.
With stock prices so low, “you’re certainly rewarded for risk-taking. Unfortunately, it’s not a great environment to take a lot of risk,” said Jack A. Ablin, chief investment officer at Harris Private Bank.
In early afternoon trading, the Dow fell 76.78, or 0.97%, to 7,855.98, after trading in positive territory earlier in the session. US markets are closed on Monday for Presidents Day.
Broader stock indicators also turned lower. The Standard & Poor’s 500 index fell 8.17, or 0.98%, to 827.02, and the Nasdaq composite index fell 8.98, or 0.58%, to 1,532.73.
The Russell 2000 index of smaller companies fell 1.98, or 0.44%, to 448.44.
Declining issues outnumbered advancers by about 9 to 5 on the New York Stock Exchange, where volume came to 510.3 million shares.
Bond prices were mostly lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.89% from 2.79% late on Thursday.
The yield on the three-month T-bill, considered one of the safest investments, rose to 0.30% from 0.28%.
In earnings news, PepsiCo said its fourth-quarter profit fell, but the soft drink maker’s adjusted results met analysts’ expectations. Pepsi shares rose 75cents to $52.75.
Teen retailer Abercrombie & Fitch Co. said its fourth-quarter profit slid 68% due to hefty asset impairment and tax costs and dropping sales. But the results, after stripping out one-time items, beat estimates. Shares rose $1.79, or 8.7%, to $22.49.
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First Published: Sat, Feb 14 2009. 05 33 AM IST