U.S. stocks knocked by worry over value of bank assets
10:59 AM EST February 12, 2009
NEW YORK (MarketWatch) -- With Washington moving on a stimulus package to jump start the economy, the measure does little to address the persistent weight dragging the stock market down: placing a value on the toxic assets held by financial institutions.
"We need to know where they are going to price the mortgage assets in order to stabilize the financial institutions," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
On Thursday, the battered financial sector once again led the market's sharp decline, with issues including Zions BancorpFifth Third Bancorp and Wells Fargo & Co. all down about 9%.
After sliding more than 200 points early on, the Dow Jones Industrial Average was more recently down 146.39 points at 7,793.14. The S&P 500 shed 14.07 points to 819.67, and the Nasdaq Composite fell 9.95 points to 1,520.55.
While a $789 billion stimulus deal is expected to clear the House and Senate as soon as Thursday, the proposed legislation fails to adjust the mark to market rule, putting "even more pressure on the Treasury to nail down some kind of a valuation model," said Pado.
"We're heading into a long weekend, and (Treasury Secretary Timothy) Geithner is off to Europe, and still nobody knows how much these assets are worth," said Marc Groz, founder and chief investment officer of Topos LLC. |
