- The Washington Times - Friday, March 6, 2009

UPDATED:

Wall Street staged a rally in the final minutes of trading Friday, overcoming a near-daylong downdraft spurred by a sell-off in hi-tech and bank stocks and closing mixed.

The tech-heavy Nasdaq Composite retreated below the 1,300 mark and the Dow Jones Industrial Average recovered during the late surge from a drop below 6,500.

At the close, the Dow rose 32.50, or 0.49 percent, to 6,626.94. The Nasdaq dipped 5.74, or 0.44 percent, to 1,293.85. The Standard & Poor’s 500 inched up 0.83, or 0.12 percent, to 683.38. More than 8.4 billion shares changed hands on the New York Stock Exchange.

Despite a rally Wednesday and the late surge into positive territory Friday, the markets suffered a bad week. The Dow lost 6.2 percent, the Nasdaq fell 6.1 percent and the S&P 500 sank 7 percent for the week, CNBC said. It marked the S&P 500’s worst week since November, it said.

Bank stocks, the target of a weeks-long sell-off because of investor fears of insolvency, sustained some of the heaviest losses for the week. Citigroup lost 33 percent, JPMorgan Chase 31 percent, Wells

Fargo & Co. 29 percent and Bank of America 20 percent, CNBC said.

JPMorgan took a dim view of future profits for Apple Inc., sending the iPod and computer maker into a slide of more than 6 percent that later bounced back to a loss of about 4 percent for the day. The stock closed at $85.24 a share.

Wall Street opened moderately higher Friday despite a government report showing that the unemployment rate jumped to 8.1 percent, apparently in reaction to the February jobless numbers being less than they were in January and December.

Some bank stocks, which have taken a drubbing because of worries about the solvency of the financial system, went up but JPMorgan Chase dropped nearly 7 percent. Wells Fargo & Co. announced a cut in its dividend from 34 cents to 5 cents, boosting its shares by more than 5 percent.

The Labor Department report put the official jobless rate at 8.1 percent, meaning a loss of another 651,000 jobs in February on top of the upwardly revised figures of 655,000 in January and 681,000 in December. The February number marked the highest number of jobless since December 1983.

Economists at PNC Financial Services Group Inc. of Pittsburgh, Penn., predicted that the unemployment rate will climb to nearly 9 percent in the months ahead and that confidence levels will not improve until the country can see results from the Obama administration’s economic stimulus and housing initiatives.

“Certainly, the turmoil in the U.S. auto industry adds substantial downside risk to both manufacturing and retail employment for the remainder of this year,” PNC’s chief economist, Stuart Hoffman, and its senior economist, Robert Dye, said in a statement made available to The Washington Times.

“Consistent deterioration in labor market conditions adds to the drag on consumer spending and contributes to the self-reinforcing downward spiral in house prices,” they wrote. “In the absence of visible traction from the spate of recent policy initiatives, there is no reason to expect current abysmal readings on consumer, business and investor confidence to improve significantly in the near term.”

The markets may have taken the February figure as a good sign showing that the monthly unemployment rate may be bottoming out. For example, the number of people who filed for jobless claims for the first time last week dropped unexpectedly to 639,000 from the previous week’s upwardly revised figure of 670,000.

More than 4.4 million people lost their jobs since the recession began in December 2007, about 3.3 million in the past six months alone.

“Job loss continues at a stunning pace,” Lawrence Mishel and Heidi Shierholz of the Economic Policy Institute in Washington said in a statement made available to The Washington Times. “We haven’t seen employment fall off a cliff like this in over 30 years.”

Investors had braced themselves for worse unemployment news, with futures prices already n the tail of another down day on Wall Street Thursday, wagged in part by a bankruptcy warning from giant automaker General Motors Corp., until recently the biggest manufacturer of vehicles in the world.

The Dow Jones Industrial Average plunged more than 281 points Thursday.

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