- The Washington Times - Thursday, May 21, 2009

Wall Street closed Wednesday with losses after hearing mixed news about banks and the health of the economy.

The Dow Jones Industrial Average closed at 8,422.04, down 52.81 points. The broader Standard & Poor’s 500 Index closed at 903.47, down 4.66 points, and the tech-heavy Nasdaq Composite Index closed at 1,727.84, down 6.70 points.

The markets posted early gains after Bank of America reported raising $13.47 billion through a stock offering to meet the government’s demand for additional capital to protect against an extended or worsening recession.

Investors appeared optimistic because the bank raised the money in 12 days after the federal government made the demand as part of its findings in “stress tests” of the country’s 19 largest financial institutions. Bank of America was among 10 banks required to raise money, according to the test results released May 7.



Bank of America stock closed at $11.50, up 25 cents.

Regions Financial Corp., another of the 10 stressed banks, said Wednesday it will offer $1 billion of common shares and $250 million of new preferred shares to raise the capital.

Regions’ stock closed at $4.89, down 35 cents. Treasury Secretary Timothy F. Geithner told Congress the 19 banks have raised or plan to raise $56 billion to repay the government bailout. About $48 billion of that amount will come from the 10 undercapitalized banks.

Mr. Geithner also said that the economy is “beginning to heal” but that the Obama administration is far from an exit strategy.

In addition, the Federal Reserve said the economy continues to contract, though more slowly, and cited such lingering concerns as consumer spending, tight credit, unemployment and home values.

Investors also were focused on oil prices. The price of light, sweet crude on the New York Mercantile Exchange topped $61 a barrel, a six-month high.

The increase followed a weekly Energy Department report showing a decrease in U.S. oil supplies for two straight weeks.

Marathon Oil Corp. closed at $30.38, up 68 cents.

The markets are up more than 30 percent since hitting a 12-year low in early March largely because of the favorable results of the stress tests and first-quarter bank earnings that exceeded analysts’ expectations.

The rally stalled last week, with the major markets losing about 3 percent. However, they recovered Monday, gaining about 3 percent, with the Dow increasing 235 points.

Congress on Wednesday passed credit card reforms to stop escalating interest rates and high fees, and Mr. Obama is expected to sign the legislation by Friday.

Overseas, Japan’s Nikkei stock average rose 0.59 percent. In afternoon trading, Britain’s FTSE 100 fell 0.31 percent, Germany’s DAX rose 1.60 percent, and France’s CAC-40 rose 0.87 percent.

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