Stocks slide at end of rough week

Wall Street retreats as investors eye the House's OK of the stimulus plan. The Senate votes tonight.

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By Alexandra Twin, senior writer

Where the banks are failing
Bank failures and foreclosures keep mounting
How effective will the $787 billion stimulus plan be in reviving the economy?
  • It will help a lot
  • It will help, but more will be needed
  • It's not nearly enough
  • It costs too much
Your $$$
Ali Velshi is at the Chicago Mercantile Exchange for a Special Edition of Your $$$$$.
Among this week's topics:
What the stimulus means for you
Job creation: Will stimulus work?
Talking to kids about tough times
Guests include:
Diane Swonk, Chief Economist at Mesirow Financial
Terry Savage, Personal Finance Editor at the Chicago Sun Times
Janet Bodnar, Editor of Kiplinger's Personal Finance Magazine
Tune in Saturday at 1 p.m. ET and Sunday at 3 p.m. ET.

NEW YORK ( -- Stocks tumbled Friday as investors took in stride the House's passage of the $787 billion economic stimulus plan and geared up for next week's foreclosure plan.

The Dow Jones industrial average (INDU) fell 82 points, or about 1%, ending below 8,000 for the fourth session in a row.

The Standard & Poor's 500 (SPX) index lost 8 points, or about 1%. The Nasdaq composite (COMP) lost 7 points, or about 0.5%, also according to early tallies.

Stocks slipped earlier this week after the government released a bank bailout plan that lacked detail and the haggling over the economic stimulus plan stretched out another week. One bright spot came on Thursday when reports that the Obama administration is working on a plan to modify home loans helped stocks bounce back from three-month lows.

Optimism about the home loan plan remained in place Friday, but it was countered by ongoing questions about the other government initiatives. The House approved the $787 billion economic stimulus package Friday afternoon and the Senate all but approved it Friday night.

Morgan Stanley (MS, Fortune 500), Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) have all announced moratoriums on some or all foreclosures through early March, so as to allow the Obama administration time to finalize the home loan deal.

The decision follows a promise made by chief executives at some of the biggest U.S. banks Wednesday to temporarily halt foreclosures. The executives were testifying at a congressional hearing on how they had used the first half of the bank bailout money.

For the week, the Dow lost 5.2%, the S&P 500 lost 4.8% and the Nasdaq lost 3.6%.

"I think government has been a disappointment for Wall Street this week," said Ben Halliburton, chief investment officer and founder at Tradition Capital Management.

"The stimulus is a bit of a disappointment because it's not going to create as many jobs as initially thought," he said. "The Treasury plan is still being detailed, and people had hoped that more progress would have been made already."

Market breadth was negative and volume was pretty light ahead of the long holiday weekend. All financial markets are closed Monday for Presidents Day.

On the New York Stock Exchange, decliners beat advancers three to two on volume of 1.24 billion shares. On the Nasdaq, losers topped winners by a narrow margin on volume of 2.02 billion shares.

Washington: The House of Representatives passed the revamped $787 billion economic stimulus bill in a mostly party-line vote. The Senate is expected to vote Friday evening.

Pending the Senate's approval, President Obama is expected to sign the hotly debated bill into law on Monday, Presidents Day.

The bill is a mix of tax cuts, aid and spending initiatives and combines previously approved measures in the House and Senate. But critics are concerned it doesn't go far enough to address the underlying problems in the economy.

In Europe, the Group of Seven finance ministers met Friday to discuss the global economic crisis.

Economy: Friday's one economic report was the University of Michigan's February consumer sentiment index. The index weakened by more than expected, falling to 56.2 from 61.2 in the previous month. Economists surveyed by thought it would dip to 60.2.

Bonds: Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.89% from 2.79% Wednesday. Treasury prices and yields move in opposite directions.

Lending rates were almost unchanged. The 3-month Libor rate inched up to 1.24% from 1.23% Thursday, according to The overnight Libor rate held steady at 0.30%. Libor is a bank lending rate.

Other markets: In global trading, most Asian and European markets ended higher.

The dollar fell against the euro and rose against the yen.

U.S. light crude oil for March delivery rose $3.53 to settle at $37.51 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $7 to settle at $942.20 an ounce.

Gasoline prices rose almost a cent to a national average of $1.961 a gallon, according to a survey of credit-card swipes released Friday by motorist group AAA.  To top of page

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