US markets close down for the week

S&P 500 trades at its lowest level in 12 years

Wall Street tried showing some resilience during the week that ended on Friday, 06 March, 2009 but still the major indices closed substantially down for the week. Stocks initially fell on growing pessimism about the banking industry and a weaker than expected home sales report. The US government also gave the market some reassurance by confirming that it will buy preferred shares from the banks that can be converted to common shares. Investors also found some solace once Federal Reserve Chairman, Ben Bernanke said for the second time that banks will not be nationalized. An in line job report tried to hold stocks in the last day but failed to compensate for the weekly loss.

The Dow Jones Industrial Average lost 436 points (6.2%) for the week to end at 6,626. Tech - heavy Nasdaq lost 84 (6.1%) to end at 1,293. S&P 500 lost 52 (7%) to end at 683. Slew of negative economic data and continued concerns over the state of financials weighed on investor sentiment during the week. In the end, all three of the major indices fell to multi-year lows with the S&P 500 trading at its lowest level in 12 years. Selling pressure was broad-based, although financials saw the brunt of the decline.

On Monday, 02 March, 2009, stocks began the session in negative territory as investors reacted negatively to AIG's earning report. AIG posted a fourth quarter loss exceeding $60 billion. Reports indicated that it is the largest quarterly loss in U.S. corporate history.

Traders also focused their attention on famous investor Warren Buffet. Investor Warren Buffett stated to his shareholders in a letter that he believes the economy is in shambles, and that it will likely remain that way beyond 2009.

On Tuesday, 03 March, Fed Chairman Bernanke Fed Chairman Bernanke and Treasury Secretary testified in front of the Senate Budget Committee and House Ways and Means Committee respectively. In their respective testimonies, while Geithner stated that long-term debt reduction is crucial for the economy, Bernanke stated that though the near-term outlook for the economy remains weak, a number of factors should promote the return of solid gains in economic activity in the context of low and stable inflation. Bernanke also indicated that the effectiveness of actions in restoring financial stability will be critical determinants of the timing and strength of a recovery.

On Wednesday, 04 March, the ADP employment index reported that the U.S. labor market worsened in February, as private-sector firms cut 697,000 jobs in February,2009. The drop in ADP index was the largest ever, dating back to 2001. January's loss was revised sharply lower to 614,000 from 522,000 reported a month ago.

In the US market on Friday, 06 March, 2009 stocks lingered in the red for the full day. But the broader market turned in a modest gain, thanks to a late rally effort that overcame steep losses. The Dow Jones Industrial Average ended higher by 32 points at 6,626, the Nasdaq closed lower by 6 points at 1,293 and the S&P 500 closed higher by 0.83 points at 683.

On Friday, the February jobs report checked in, which indicated that nonfarm payrolls fell 651,000, in-line with expectations, and unemployment climbed more than expected to a 25-year high of 8.1%. The financial sector played a spoilsport on Friday. But Wells Fargo was one of the few financial players to log a gain. The company announced it will cut its quarterly dividend to $0.05 per share from $0.34 per share in order to preserve capital and repay government funds as quickly as possible.

With Friday's close, though the Nasdaq finished lower for the 13th time in 15 sessions, the Dow and S&P 500 were each able to close modestly higher. The Dow has finished four of the last 15 sessions higher. The S&P 500 has finished three of the last 15 sessions higher.

Economic news added to concerns of the state of the U.S. economy. Among total auto sales for February, GM and Ford reportedly registered 53% and 48% drop in auto sales in February.

The National Association of Realtors reported during the week that the number of new sales contracts on existing homes fell a seasonally adjusted 7.7% in January amid job losses and weak consumer confidence. The index is now down 6.4% from a year earlier.

A large number of retailers reported poor same-store sales for February - all reported double-digit declines. But there was one exception. Wal-Mart same-store sales rose 5.1% and also increased its dividend.

For the year 2009, Dow, Nasdaq and S&P 500 are down by 24.5%, 18% and 24.3% respectively.