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Wall Street sinks as Obama warns of oversight

Wall Street sinks as Obama warns of oversight
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First Published: Thu, Feb 26 2009. 12 57 PM IST
Updated: Thu, Feb 26 2009. 12 57 PM IST
New York: US stocks fell on Wednesday after US President Barack Obama warned of stricter oversight for Wall Street, raising the specter of greater regulation that investors fear could sap profits.
Obama’s comments near the market close rattled investors when he said financial institutions that pose a serious risk to markets should be subject to serious government supervision.
“Whenever there is a question about how large the government role will be ... the market doesn’t like that,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
Trade was choppy on Wednesday, with stocks buffeted by uncertainty over Washington’s plan to shore up the banking system and weak housing sales. The market had turned briefly positive after the government gave details on stress tests of banks’ capital levels, with investors betting that banks would be able to withstand the news tests with relative ease, before finally falling in late trade.
The Dow Jones industrial average was down 80.05 points, or 1.09%, at 7,270.89. The Standard & Poor’s 500 Index was down 8.24 points, or 1.07%, at 764.90. The Nasdaq Composite Index was down 16.40 points, or 1.14%, at 1,425.43.
The Dow is down 9.1% for the month and 17.2% year-to-date.
Sales of previously owned US homes plunged much more than expected in January, pulling down shares of homebuilders and big manufacturers.
The Dow Jones Home Construction index fell 2.1%, while United Technologies and Caterpillar Inc slid more than 3%.
After the closing bell, shares of Fluor Corp rose 4.3% after the engineering and construction company posted a quarterly profit that topped Wall Street estimates and maintained its earnings outlook for the year.
Bank of America jumped 9% to $5.16 and JPMorgan Chase added 3.4% to $21.73, but both pared earlier gains after Obama warned of greater oversight.
On Nasdaq, shares of First Solar, a maker of thin-film solar modules, plunged almost 22 percent to $107.65 after it gave a bleak short-term industry outlook.
Shares of Wynn Resorts Ltd fell nearly 16% to $21.75 after the casino operator reported a fourth-quarter loss as the recession hurt business and it recorded a tax expense.
Shares of insurer Lincoln National Corp. fell 14% after it slashed its dividend more than 95%. The S&P Life Insurance index fell 5.3%.
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First Published: Thu, Feb 26 2009. 12 57 PM IST
More Topics: Markets | US | Stocks | Wall Street | Dow Jones |