21 Feb 2009

Wall St skids on bank fears

11:54 am on 21 February 2009

US stocks tumbled on Friday, with the Dow industrials ending at a six and a half year low, on fears the government may be forced to nationalize some big banks.

Uncertainty about how Washington will rescue beleaguered banks persisted even as the White House issued its most direct statement yet on banks, saying it supported a privately held banking system.

The Dow Jones industrial average fell 100.28 points, or 1.34%, to close at 7,365.67.

The Standard & Poor's 500 Index ended down 8.89 points, or 1.14%, at 770.05.

The Nasdaq Composite Index dipped 1.59 points, or 0.11%, to 1,441.23.

Investors view the stabilisation of the banking sector as crucial for the economy to avert further deterioration, with both businesses and consumer lending still constrained.

Citigroup and Bank of America, which were buffeted by rumors that they were candidates for nationalization, finished down 22.3% and 3.6%, respectively.

Bank of America closed at $US3.79, and was the most heavily traded stock on the New York Stock Exchange. Citigroup ended at $US1.95, the first time since January 1991 it closed below $US2.

For the week, the Dow fell 6.2%; the S&P 500 slid 6.9%; and the Nasdaq tumbled 6.1%.