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By Jennifer Yousfi
The markets extended losses yesterday (Monday) edging ever closer to bear territory, as financial stocks plunged on continued U.S. recession concerns.
At the New York close, the three major U.S. stock indices had all posted losses for the third day of trading. The blue-chip Dow Jones Industrial Average Index had a decline of 153.54 points (-1.29%), to trade at 11,740.15. The tech-laden Nasdaq Composite Index slumped 43.15 points (-1.95%), to reach 2,169.34. And the broader Standard & Poor's 500 Index had a slip of 20.00 points (-1.55%), to settle at 1,273.37.
The Dow was 17.3% off its October 2007 peak, while the Nasdaq was down 24.2% and the S&P 500 was down 19.2% from their 52-week peaks. A decline of 20% signifies a bear market.
"What's really moving the market are fears about a recession," Edward Hemmelgarn, president of Cleveland-based Shaker Investments Inc. with $350 million assets under management, told Bloomberg News. "People have stepped in and gotten burned so many times that they're getting fairly reluctant to put money to work. It's tough to find anything that's going up."
The basic materials (-4.04%) and capital goods (-1.32%) sectors had the biggest declines. The only sector to post a gain at midday was the consumer non-cyclical sector, up a scant 0.18%.
Financial shares also were hard hit as the sector declined 2.02%. Citigroup Inc. (C) forecast an additional $9 billion in credit-related writedowns for the financial industry in the first quarter. Citi's own shares shed $1.20 to close at $19.71.
The Bear Stearns Cos. Inc. (BSC) shares headed lower on rumors that the firm was cash poor. Representatives denied the reports, but it wasn't enough to keep shares from sinking over 10% to close at $62.30.
In overseas markets, Japan's Nikkei Index had a 250.67-point decline to reach a 2-and-a-half-year closing low of 12,532.13. Hong Kong's blue-chip Hang Seng Index increased 203.72 points to close at 22,705.05 fueled in part by a rise in Hong Kong-listed shares of HSBC Holdings PLC (HBC).
"There's kind of an overhang of concerns about weakening U.S. economic conditions spreading globally," Frederic Dickson, a market strategist at D.A. Davidson & Co in Lake Oswego, Oregon, told Reuters.
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