Reply to thread

Source: http://finance.yahoo.com

Threats of tighter monetary policy in China and increased bank regulation combined with a sell-the-news mentality to drop the stock market for its worst single-session percentage loss in nearly 12 weeks.

Stocks had already tumbled significantly in the previous session, but sellers were back at it after China reported stronger-than-expected fourth quarter GDP growth and a sharper-than-expected spike in inflation, which renewed concern that tighter monetary policy may be in the offing. Tighter policy in China would presumably crimp the country's growth and slow the global economic rebound.

The stock market stumbled Thursday as President Barack Obama proposed an overhaul of the nation's banking system that could limit financial companies' ability to make huge profits on trading.

The Dow Jones industrial average skidded 213 points after dropping 122 on Wednesday, giving the Dow its biggest two-day point drop since late March. The index has seen four straight triple-digit moves and the latest slide erased the Dow's gains for 2010. Bond prices rose as the stock market became more volatile.

Obama said he would seek to limit the size and complexity of large financial companies so that a bank's collapse wouldn't endanger the overall financial system. Tightening the rules on risk-taking and trading at banks could hurt profits at those companies.

The NYSE DOW closed LOWER -213.27  -2.01% on Thursday January 21

Sym. Last......... ........Change.......... 

Dow 10,389.88 -213.27 -2.01% 

Nasdaq 2,265.70 -25.55 -1.12% 

S&P 500 1,116.48 -21.56 -1.89% 

30-yr Bond 4.5060% -0.3700 

 

NYSE Volume 7,914,482,500  (prior day 5,453,405,000)

Nasdaq Volume 2,915,450,250 (prior day  2,395,161,750)

Europe

Symbol.... Last...... .....Change.......

FTSE 100 5,335.10 -85.70 -1.58% 

DAX 5,746.97 -104.56 -1.79% 

CAC 40 3,862.16 -66.79 -1.70% 

Asia

Symbol...... Last...... .....Change.......

Nikkei 225 10,868.41 +130.89 +1.22%  

Hang Seng 20,862.67 -423.50 -1.99%  

Straits Times 2,850.98 -42.15 -1.46% 

http://finance.yahoo.com/news/Stocks-slide-as-Obama-calls-apf-1512287612.html?x=0&sec=topStories&pos=1&asset=&ccode=

Stocks slide as Obama calls for tougher bank rules

Stocks fall for 2nd day as Obama calls for tighter restrictions on big banks; Dow falls 213

 By Stephen Bernard and Tim Paradis, AP Business Writers , On Thursday January 21, 2010, 4:54 pm

NEW YORK (AP) -- The stock market stumbled Thursday as President Barack Obama proposed an overhaul of the nation's banking system that could limit financial companies' ability to make huge profits on trading.

The Dow Jones industrial average skidded 213 points after dropping 122 on Wednesday, giving the Dow its biggest two-day point drop since late March. The index has seen four straight triple-digit moves and the latest slide erased the Dow's gains for 2010. Bond prices rose as the stock market became more volatile.

Obama said he would seek to limit the size and complexity of large financial companies so that a bank's collapse wouldn't endanger the overall financial system. Tightening the rules on risk-taking and trading at banks could hurt profits at those companies.

The move could mean changes for how big financial institutions like Bank of America, Citigroup Inc. and JPMorgan Chase & Co. are structured. Each of the stocks fell more than 4 percent.

Weakness in manufacturing also brought concern that the economy might not be recovering as quickly as hoped. The Philadelphia Federal Reserve said manufacturing in its region fell in January from December. Its index of regional manufacturing conditions fell to 15.2 from a revised 22.5 last month.

Another test for the market could come Friday. Google Inc. posted a five-fold jump in its fourth-quarter profit after the closing bell on double-digit revenue growth, but the results fell short of expectations. The stock fell $30.13, or 5.2 percent, to $552.85 in after-hours electronic trading after edging up 0.4 percent in regular trading.

Patrick Galley, chief investment officer at RiverNorth Capital in Chicago, said stocks have risen so fast in the past 10 months that expectations about an economic recovery are getting too high.

"The market can be quite fickle just because of the huge run-up that we've had," he said. "A lot of folks have their trigger finger on the sell button if they start to sense that news won't meet expectations."

According to preliminary calculations, the Dow fell 213.27, or 2 percent, to 10,389.88, its biggest point and percentage drop since Oct. 30. The index is down 335.55 points, or 3.1 percent, in two days. That was the biggest point drop since the two days ended March 30 and the biggest percentage loss since June 16.

The index hasn't closed with triple digit moves in four straight trading days since May 6-11.

The broader Standard & Poor's 500 index fell 21.56, or 1.9 percent, to 1,116.48. The Nasdaq composite index fell 25.55, or 1.1 percent, to 2,265.70.

Stocks dropped Wednesday after China said it would curb bank lending to slow its economy. The latest sign of China's supercharged growth came on Thursday as the country reported 10.7 percent economic expansion in the fourth quarter and 8.7 percent for all of last year. The numbers reinforced concerns that China will take more steps to tighten monetary policy and rein in its economy, which could hamper a global economic rebound.

The questions about how profits will hold up at banks drove up expectations that trading will become more volatile. The Chicago Board Options Exchange's Volatility Index jumped 19.2 percent. A rise in the VIX, which is known as the market's fear index, signals that investors expect bigger swings in stocks.

Shares of Bank of America fell $1.02, or 6.2 percent, to $15.47, while Citigroup slid 19 cents, or 5.5 percent, to $3.27. JPMorgan fell $2.86, or 6.6 percent, to $40.54.

Concern about the U.S. economy grew Thursday after an unexpected jump in unemployment claims. The Labor Department said workers filing for unemployment benefits for the first time rose by 36,000 to 482,000 last week. Economists polled by Thomson Reuters were expecting a small drop. The four-week average rose for the first time since August.

The report provided a grim reminder that while the economy might be improving, a robust recovery is unlikely until companies start adding jobs. The unemployment rate remained at 10 percent last month.

Bond prices rose as the stock market fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.60 percent from 3.65 percent late Wednesday.

The dollar rose against other major currencies, while gold fell. A rise in the dollar hurt commodity prices, which become more expensive for foreign buyers when the dollar strengthens.

Crude oil fell $1.66 to $76.08 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 11.25, or 1.8 percent, to 628.36.

Four stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.1 billion Wednesday.

Britain's FTSE 100 fell 1.6 percent, Germany's DAX index lost 1.8 percent, and France's CAC-40 fell 1.7 percent. Japan's Nikkei stock average rose 1.2 percent.