Stocks Slump, Led by Financials
Jan 5 10:27am ET
NEW YORK (Reuters) - Stocks fell in early morning trading on Friday, led by financial shares, as investors worried that the surprise interest-rate cuts by the U.S. Federal
Reserve may signal distress in the banking system.
The Dow Jones industrial average <.DJI> dropped 115.80 points, or 1.06 percent, to 10,796.61. The broader Standard & Poor's 500 Index <.SPX> dipped 11.50 points, or 0.86 percent, to 1,321.84.
The technology-laced Nasdaq Composite Index <.IXIC> lost 63.54 points, or 2.48 percent, at 2,503.29.
Bank of America's stock was suspended pending an announcement and caused mounting tension throughout the morning. But the company issued a statement
saying: "We know of no basis to support speculative rumors about our operations...
The company has not experienced any significant losses in derivatives or other trading activities."
The company added it remains comfortable with its guidance for credit quality in 2001 as provided to investors last month. Financial stocks were still weak, with Citigroup
and JP Morgan Chase & Co. both lower in heavy trading.
Meanwhile, monthly jobs numbers that added to more signs of an economic slowdown before the opening, just two days after the Fed lowered key interest rates in a move that sparked an explosive rally in stocks.
"It's hard to make the case that an interest rate cut is to the solution to all problems, it should help consumer sentiment somewhat," said Bill Meehan, chief market analyst at Cantor Fitzgerald & Co. "Right now the concerns are what kind of economy are we looking at, how long will it take for the Fed rate cuts to have an impact. |
