RTRS: US STOCKS-Wall Street tumbles on BofA, Citi worries
U.S. stocks tumbled on Thursday as news of a plea by Bank of America (BAC.N) for more government aid compounded investors' fears about mounting financial sector losses.
Shares of Bank of America, the largest U.S. bank, were a top drag on the Dow, with a drop of 22 percent to $7.93. Citigroup (C.N) tumbled 20 percent to $3.62 a day before it was due to report quarterly results and a new strategic direction.
"I think it's tremendously disappointing that the banks continue to flounder," said Carl Birkelbach, head of Birkelbach Management in Chicago.
"What's going on here is that the first batch of the (financial rescue bailout) funds was supposed to put out the fire, but now it looks like the fire is coming up again."
Investors feared a need for more government aid in the financial sector pointed to mounting credit losses as the year-long recession deepens. The S&P financial index .GSPF fell nearly 7 percent. Talk of government intervention raises the specter of current shareholders being wiped out.
The sectoral KBW Banks Index .BKX dropped 8.9 percent.
The Dow Jones industrial average .DJI slid 136.83 points, or 1.67 percent, to 8,063.31. The Standard & Poor's 500 Index .SPX dropped 18.46 points, or 2.19 percent, to 824.16. The Nasdaq Composite Index .IXIC fell 25.22 points, or 1.69 percent, to 1,464.42.
The slide put another dent in the market's recovery push since the Nov. 21 bear market low. The benchmark S&P 500 is now up just 9 percent since that low after starting 2009 up more than 20 percent.
Citi shares have been on the defensive since the bank announced the sale of a controlling stake in its Smith Barney retail brokerage business, a crown jewel, to Morgan Stanley (MS.N) to replenish capital.
The push for aid at Bank of America comes after the bank realized that credit losses at Merrill Lynch & Co, which it bought on Jan. 1, were much higher than expected, a person familiar with the matter said. [ID:nN14486706] Earlier, Bank of America shares toucher their lowest level since 1991.
Moody's cut the rating on JPMorgan's (JPM.N) senior debt after the No. 2 U.S. bank posted a 76 percent slide in quarterly profit. The stock slipped 0.1 percent to $25.90.
On Nasdaq, shares of Apple Inc (AAPL.O) were a top drag after the iPod and iPhone maker said Chief Executive Steve Jobs had decided to take a leave of absence due to health issues. The stock fell more than 4 percent to $81.34. (Additional reporting by Ryan Vlastelica, Editing by James Dalgleish)
