- The Washington Times - Friday, January 16, 2009

Wall Street whipsawed through a tumultuous session and ended with modest gains Thursday as concerns eased over more bank losses.

At the close, the Dow Jones Industrial Average rose 12.35, or 0.15 percent, to 8212.49, the first time in seven sessions that it ended in positive territory. The Nasdaq Composite Index, laden with high-tech stocks, went up 22.20, or 1.49 percent, to 1511.84. The broader Standard & Poor’s 500 inched up 1.12, or 0.13 percent, to 843.74.

After the close, chip maker Intel Corp. said its fourth-quarter profit plunged 90 percent because of a lack of demand. Its net income dropped to $234 million, or 4 cents a share, compared with $2.27 billion, or 38 cents a share, for the same three-month period a year earlier.

The markets opened lower and slid more than 200 points, with the Dow falling below 8,000 for the first time since Nov. 21. But they rebounded over speculation that Congress would vote to use some of the remaining $350 billion in bailout money to help ailing banks, chiefly Bank of America.

At the same time, the Labor Department reported an unexpected jump in new jobless claims last week to more than half a million people.

Bank stocks, which are components of the Dow, have been dragging down the markets for the past several days because of concern that credit and mortgage losses will cause them to fail the way Lehman Brothers collapsed in the fall. Shares of both Bank of America and Citigroup fell about 25 percent.

The drop in the prices for both banks “looks like a redux of Lehman,” Tom Sowanick, chief investment officer of Clearbrook Financial LLC of Princeton, N.J., told The Washington Times.

He suggested that the banks were writing down mortgages to declare them as unrealized losses, making their balance sheets look worse, so the federal government would come to the rescue, either by finding a merger candidate or with bailout money.

The Treasury Department did not come to the aid of Lehman Brothers but has helped other banks since then with bailout money requested by the Bush administration and approved by Congress.

The Labor Department reported that the number of people filing requests for unemployment benefits increased to a seasonally adjusted 524,000 during the week ended Saturday from an upwardly revised number of 470,000 the previous week. Analysts had expected the total to be 500,000, the Associated Press reported.

A reason for the sudden upsurge may be that people who were dismissed from their jobs in December may have waited until after the holidays to file for unemployment insurance. There had been decreases in the numbers of new filings during the last two weeks of 2008.

The four-week average of claims, which takes into account fluctuations in the numbers, dropped by 8,000 to 518,500 last week, the Labor Department said. And the number of people who continue to request benefits fell by 100,000 to 4.5 million, a drop from an upwardly revised figure of 4.6 million the previous week.

Light, sweet crude for February delivery fell 5 percent, or $1.88, to settle at $35.40 a barrel Thursday on the New York Mercantile Exchange.

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