http://www.nytimes.com/2009/02/21/business/economy/21markets.html?_r=1&hp
Fears that the country’s largest banks could be nationalized swamped Wall Street on Friday, pummeling stock markets and sending financial shares sharply lower. Bank of America fell near $3 a share, and Citigroup fell below $2.
The financial sector fell 7 percent overall while Bank of America, Citigroup and Wells Fargo all fell by 20 percent or more. Troubled regional banks were hammered as well, with of Ohio-based Fifth Third Bancorp flirting with $1 a share.
And analyst said that worries are likely to keep growing absent a step-by-step plan from the government that addresses the billions of troubled mortgage-related assets on banks’ balance sheets.
“All these banks are becoming insolvent,” said David Kovacs, chief investment officer of quantitative strategies at Turner Investment Partners. “These banks are undercapitalized. What they have on their balance sheets is bad debt. They don’t have the cash to lend. There is no solution, and time is hurting these entities.”
Markets in Asia and Europe closed lower on more glum economic data and a round of disappointing corporate news, including the bankruptcy filing of the automaker, Saab. The FTSE 100 in London fell 3.2 percent while the DAX in Frankfurt slid 4.8 percent. The CAC 40 in Paris fell 4.2 percent.
The Labor Department reported that consumer prices had increased 0.3 percent in January, rising for the first time since July. The increase eased fears that the American economy was heading into a deflationary spiral of lower prices and lower economic growth, but consumer prices remained flat year-over-year, a sign of continuing pressure on prices as the recession deepens.
Fears that the country’s largest banks could be nationalized swamped Wall Street on Friday, pummeling stock markets and sending financial shares sharply lower. Bank of America fell near $3 a share, and Citigroup fell below $2.
The financial sector fell 7 percent overall while Bank of America, Citigroup and Wells Fargo all fell by 20 percent or more. Troubled regional banks were hammered as well, with of Ohio-based Fifth Third Bancorp flirting with $1 a share.
And analyst said that worries are likely to keep growing absent a step-by-step plan from the government that addresses the billions of troubled mortgage-related assets on banks’ balance sheets.
“All these banks are becoming insolvent,” said David Kovacs, chief investment officer of quantitative strategies at Turner Investment Partners. “These banks are undercapitalized. What they have on their balance sheets is bad debt. They don’t have the cash to lend. There is no solution, and time is hurting these entities.”
Markets in Asia and Europe closed lower on more glum economic data and a round of disappointing corporate news, including the bankruptcy filing of the automaker, Saab. The FTSE 100 in London fell 3.2 percent while the DAX in Frankfurt slid 4.8 percent. The CAC 40 in Paris fell 4.2 percent.
The Labor Department reported that consumer prices had increased 0.3 percent in January, rising for the first time since July. The increase eased fears that the American economy was heading into a deflationary spiral of lower prices and lower economic growth, but consumer prices remained flat year-over-year, a sign of continuing pressure on prices as the recession deepens.
