Updated from 4:11 p.m. EST
Stocks in New York fizzled to losses again Thursday, with healthcare suffering but banks still in positive territory, as investors thumbed through the President's proposed $3 trillion-plus
, some more details on the financial stability plan, and a trio of worse-than-expected economic data.
Dow Jones Industrial Average
gave up 88.81 points, or 1.2%, to 7182.08. The
was off by 12.07 points, or 1.6%, to 752.83. The
slid 33.96 points, or 2.4%, to 1391.47.
"Traders are stepping back and catching their breath," said DA Davidson chief market analyst Fred Dickson. "We're at the end of the month, and normally you get some new investment flows, but at this point, they're just trying to process the budget details and the next stage of the bank plan."
was the worst performers on the
, down 6.7% at $26.04. Health insurer and pharma stocks were widely lower, as investors reacted to sharp cost-cutting in President Obama's proposed budget.
gave up 9.7%;
lost 11.3%; and
, the Dow's strongest component, added 6.1% to $23.05. On the whole, banks outpaced the market, with the KBW banking index up 5.4%, despite a hiccup after a report by the Federal Deposit Insurance Corp.
The FDIC said the commercial banks and savings institutions it insures reported a net loss of $26.2 billion in the fourth quarter of 2008, a decline of $27.8 billion from the year-ago quarter, and the first quarterly loss since 1990.
Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter. Moreover, FDIC Chairman Sheila Bair said that "even the healthiest banks should consider
temporarily suspending or cutting dividends during the credit crisis to preserve capital,"
The last couple of days the market has improved for the financials, and some of that's based on the details from the Treasury Department regarding the "stress test" and other terms of the financial stability plan, said Michael James, managing director at Wedbush Morgan Securities, noting that it pushed out any decision regarding potential additional capital from the government into the banks for at least a few months.
"The market is interpreting that as if the banks are being given more time, and maybe things can show some more improvement by that time," he says.
President Obama has indicated that troubles aren't close to over for struggling banks in the U.S., and has included in the
a provision for providing an extra $250 billion -- atop the $700 billion already allocated -- for troubled banks and businesses, according to a report by the
were slammed Thursday, losing 30.9% to $5.80, on a different provision in the budget, which would end certain fee payments to private lenders,
One of the government's first bailout projects,
with U.S. officials over a restructuring that would divide the firm into at least three government-controlled divisions in an attempt to keep it afloat, the
reported. Shares were up 13% to 52 cents.
A more recent beneficiary of the bailout efforts,
, reported Thursday that it lost $9.6 billion in the fourth quarter as revenue plunged 34%, and will require more government funding to stay afloat. Its shares gave up 6.7% to $2.38.
The day started on an optimistic note, though, despite three negative surprises in economic reports -- on housing, jobs and durable goods. "Sentiment and emotion are having a much greater impact than the continued negative data," said Wedbush Morgan's James early Thursday.
Nonetheless, says a Schaeffer's Sparks, "
economic news will continue to slap the market in the face, in terms of showing investors the stark reality."
rose far more than expected last week, rising to 667,000 from 631,000. The number of people receiving unemployment insurance for more than one week also surpassed expectations, coming in at 5.1 million, the fifth straight record-setting week on data going back to 1967.
Also, the Commerce Department said home sales fell more sharply than expected to 309,000 in January from 341,000 in December, the lowest on record dating back to 1963. The median house price was $201,000, 13.5% lower than a year prior. And while inventory of available homes for sale in January was the lowest in more than five years, at 342,000, supply is now at a record-high 13.3 month's worth, because of sluggish sales.
Then, in its latest report on
U.S. factory activity
, the Commerce Department said that orders for big-ticket goods declined by 5.2% in January, outpacing expectations, as global economic troubles affected a broad base of orders, including autos, metal products, machinery, computers, and household appliances.
While the economic data here continues to be bad, as further evidence that the economic crisis is by no means limited to the U.S., Britain's second-largest bank, the
Royal Bank of Scotland
in 2008 after a bout with heavy writedowns and impairment charges. The loss, although the worst in U.K. corporate history, was less severe than expected. RBS said it will shift 20% of its funded assets to a noncore division with plans to dispose or run them down over the next three to five years.
RBS shares ran up 18.8%, to $7.83.
On the domestic front, the second-largest U.S. bank, JPMorgan Chase, said it expects to cut 12,000 jobs -- 2,800 more than previously expected -- as it integrates the former Washington Mutual. On the bright side, retail banking chief Charlie Scharf said that the bank expects to achieve most of the $2.75 billion in savings from the acquisition by the end of 2009, sooner than expected.
In commodities, oil rose $2.72 to settle at $45.22, while gold fell $23.60 to settle at $942.60 an ounce.
Longer-dated Treasuries were recently declining the 10-year note was recently lower by 16/32 to yield 3%, the 30-year was lower by 1-14, yielding 3.7%.
The dollar was slightly weaker against the yen, and stronger vs. the pound and euro.
Stocks abroad were largely higher. The FTSE in London and the DAX in Frankfurt were up 1% to 3%, after Japan's Nikkei and Hong Kong's Hang Seng ended with gains of 1.7% and 2.6%, respectively.