Quantcast
StarBulletin.com

Stock rally fades amid assessment of Fed moves


By

POSTED: Friday, March 20, 2009

NEW YORK » Investors had a change of heart about the Federal Reserve's plans to buy Treasury bonds and doused Wall Street's two-week-old rally.

Banking and other financial shares pulled the market lower yesterday as investors worried the the Fed's plan would hurt the dollar and revive inflation.

Skepticism about how long it would take for the effects of the Fed's program to take hold also weighed down shares, particularly those of banks.

The Dow Jones industrial average fell 85.78, or 1.2 percent, to 7,400.80.

The broader Standard & Poor's 500 index fell 10.31, or 1.3 percent, to 784.04, while Nasdaq composite index fell 7.74, or 0.5 percent, to 1,483.48.

Wall Street's move lower ended, at least for now, a buying spree that has driven stocks sharply higher since last week. Even with yesterday's slide, the Dow is still up 13 percent and the S&P 500 index is up 15.9 percent over the past eight days.

Light, sweet crude rose $3.47, or 7 percent, to settle at $51.61 a barrel on the New York Mercantile Exchange.

Citigroup fell 48 cents, or 15.6 percent, to $2.60. Citigroup had traded just under $1 early last week.

The Russell 2000 index that tracks small company stocks fell 4.37, or 1 percent, to 413.26.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 2.60 percent from 2.50 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, slipped to 0.18 percent from 0.20 percent late Wednesday.

The dollar mostly fell against other major currencies, while gold prices soared.