Updated from 5:01 p.m. EDTStocks on Wall Street lost ground on Friday, partly owing to a drag from financials, but the major averages finished the week higher than where they started. The Dow Jones Industrial Average fell 122.42 points, or 1.7%, to 7278.38, and the S&P 500 was down 15.50 points, or 2%, at 768.54. The Nasdaq lost 26.21 points, or 1.8%, to 1457.27. For the week, the Dow rose 0.7%, the S&P gained 0.4%, and the Nasdaq added 1.8%, marking the first two-week gain since the spring of 2008. The financial stocks weighed down the Dow, with Bank of America ( BAC) losing 10.7% to $6.19, and JP Morgan Chase ( JPM) and American Express ( AXP) down 7.2% to 6.2%, respectively. The KBW Bank index was off by 5%. "There's really no major news, the bears are just taking profits before the weekend after nearly two weeks of an uninterrupted rally," says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's some profit-taking in particular in the sectors, like financials, that led us on the way higher." But this isn't necessarily bad, it could be a "constructive pullback," says Detrick. "Volume is light, but you want to see pullbacks on lighter volume in order for the rally to continue. It's a necessary evil for rallies." Potentially adding some volatility is that it's a "quadruple witching" day, or the last trading day for the March index futures, index options, equity options and single stock futures. An expiration can wreak havoc on stocks as traders unwind contracts.
Among stocks, Citigroup ( C) was up 0.8% to $2.62 following word that Chief Financial Officer Gary Crittenden has been appointed chairman of Citi Holdings, and Edward Kelly, the head of global banking, will take over the bank's leading finance position. General Electric ( GE) shares lost 5.8% to $9.54 after having its earnings estimates cut at Citi and Credit Suisse. Shares of Sony ( SNE) and Ericsson ( ERIC) were both weaker after Sony Ericsson, their electronics joint venture, said it would post a first-quarter pretax loss amid falling sales. Sony was down 2.9% at $19.93, and Ericsson was off 10.7% at $8.31.
Xerox ( XRX) shares dropped 18.7% to $4.34 in the wake of its reduced earnings forecast. The company now expects a first-quarter profit of 3 cents to 5 cents a share, well below the earlier outlook of 16 cents to 20 cents. Chatter continues about AIG ( AIG) a day after the House voted on a 90% tax on bonuses paid to certain employees of companies accepting more than $5 billion in bailout aid. Taxpayers have grown weary trying to trace who benefited from bailout money that went into other banks to cover soured contracts, a portion of which went overseas. On Friday, Goldman Sachs ( GS) said it had a total exposure of $10 billion to AIG through credit derivatives, but that it had hedged its risk through swap arrangements with other banks, according to a Wall Street Journal report. Commodities were mixed overall, though gold and crude oil retreated. Oil fell 55 cents to settle at $51.06 a barrel at the New York Mercantile Exchange, and gold lost $2.60 to $956.20 an ounce.
The dollar, battered since the Federal Reserve announced plans Wednesday afternoon to inject new capital into the economy, was strengthening against the euro, the pound and the yen. As for the Treasury market, the 10-year note was down 12/32 in price, yielding 2.7%, and the 30-year bond was losing 20/32 to yield 3.7%. Overseas, London's FTSE 100 was up 0.7% at 3843. Frankfurt's Dax edged up 0.6%, and the Paris Cac added 0.5%. Tokyo's Nikkei was closed for a holiday, but the Hong Kong Hang Seng fell 2.3% to 12,884.