Updated from 3:01 p.m. EST
Stocks in New York had an erratic session Wednesday before closing lower as questions remained about the government's ability to aid the banks through the recession.
Dow Jones Industrial Average
fell 80.05 points to 7270.89 as only nine of its 30 stocks rose. The best performers on a percentage basis were
Bank of America
, up 9.1% and 14.9%, respectively.
At the same time, the
fell 8.24 points to 764.90, and the
slipped 16.40 points to 1425.43. All three measures lost about 1.1%.
The major averages were under pressure early, but they rose late in the session as
Chairman Ben Bernanke again tried to allay concerns about bank nationalization and the Treasury Department released more details on its plan to return the financial system to health. However, a pullback in the last few minutes left the indices lower for the day.
Big banks are subject to the government's "stress test," now underway, that's meant to determine if they have adequate capital. BofA,
and other large institutions are undergoing the tests.
Treasury officials said that struggling U.S. banks will receive "immediate access" to further support from the government's $700 billion financial rescue fund, originally dubbed TARP, according to
The Associated Press
The support will be provided through the purchase of preferred shares that are convertible into common shares at a discount to their price before Feb. 9. "The option to convert the preferred shares into common shares is a change in the rescue program designed to give financial markets greater confidence," according to the report.
Meanwhile, BofA CEO Ken Lewis said on
TV that Merrill Lynch and Countrywide, two recent acquisitions, have been "stars" in 2009, an encouraging statement considering some investors have fretted about the position in which the takeovers have left the Charlotte-based bank.
The market's down day followed Tuesday's speech from
, in which he shifted from the cautionary tone he had previously employed to a more confident position about the economy.
"Tonight I want every American to know this: We will rebuild, we will recover, and the United States of America will emerge stronger than before," said Obama.
As for the day's economic data, the National Association of Realtors said that
existing home sales
in January declined to a 4.49 million annual pace, the lowest level in nearly 12 years. Sales were down from 4.74 million in December, and missed the expectation for 4.79 million.
The median sales price was lower by 14.8%, year-over-year, at $170,300.
"These negative housing data, indicating that there's no end in sight to housing worries, and the continued decline in pricing, which is gaining momentum, are a major concern for the market," said Peter Cardillo, chief market economist at Avalon Partners.
The Mortgage Bankers Association, providing its own portion of housing data, said the market composite index, a measure of mortgage loan application volume, decreased by 15.1% for the week of Feb. 20, on an adjusted basis. The average contract interest rate increased to 5.07% from 4.99% for 30-year fixed-rate mortgages and to 4.71% from 4.66% for the 15-year.
Revisiting the President's address, President Obama said that the $700 billion originally pledged through the Troubled Asset Relief Program (now to be placed through the Financial Stability Plan) likely won't be enough to sort out the troubled banks.
The Wall Street Journal
reported more trouble for one of the original bailout projects. Bids for
Asian arm are due Friday, and a number of prospective bidders, including
and no further bids may be forthcoming, the
Not doing anything to help investor confidence, James Nicholson, who heads investment firm Westgate Capital Management, was reportedly one of four people arrested in the latest batch of
. Nicholson was arrested by FBI agents, according to a
A bright spot on Wednesday came as shares of General Motors led the Dow. GM executives are expected to meet with President Obama's auto industry task force on Thursday. GM and
last week asked for additional government aid.
In other corporate news, telecom-equipment supplier
will cut another 3,200 employees, or about 11% of the total workforce, as the tech giant says it's begun working with creditors on a restructuring plan. That follows the previously announced 1,800 employee reduction.
of $2.34 billion, as it recorded a charge of $594.4 million from a drop in the fair value of credit derivatives.
Not everyone is suffering, though, as
, a former
subsidiary, said its fourth-quarter profit climbed 24%, helped by strong results from most of its divisions, including its government and infrastructure and services units.
In commodities, oil and gold rose. Longer-dated Treasuries were mixed. The 10-year note was recently lower by 5/32 to yield 2.8%, while the 30-year was rising 4/32, yielding 3.5%. Stocks abroad were generally lower.