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Thursday, June 4, 2020  Spokane, Washington  Est. May 19, 1883
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News >  Business

Rebound emerges despite bank news

By STEPHEN BERNARD Associated Press

NEW YORK – Wall Street has managed its second straight comeback, but the rebound was more a sign of the market’s turmoil than strength.

Stocks closed moderately higher Friday after an erratic session that had investors tussling with concerns about the ongoing problems in the banking industry in response to more billion-dollar losses at Citigroup Inc. and Bank of America Corp. Yet investors were also heartened by plans for both banks to restore themselves to profitability, and they were also willing to place bets on a range of consumer and industrial stocks.

“It’s that tug of war between problems and promise,” said Alan Gayle, senior investment strategist at RidgeWorth Investments. “I think there is a bit of a sigh of relief that there is assistance coming for Citi and Bank of America, but it seems like there is an ongoing need for this assistance.”

For the week, the Dow Jones industrial average fell 317.96, or 3.70 percent, to close at 8,281.22. The Standard & Poor’s 500 index lost 40.23, or 4.50 percent, to close at 850.12. The Nasdaq composite index slid 42.26, or 2.70 percent, to 1,529.33.

The Russell 2000 index, which tracks the performance of small company stocks, fell 14.85, or 3.1 percent, to 466.45.

The Dow Jones Wilshire 5000 Composite Index – a free-float weighted index that measures 5,000 U.S. based companies – ended at 8,603.21, down 382.59 points, or 3.72 percent, for the week. A year ago, the index was at 13,308.47.

The companies’ fourth-quarter losses – Citi said it lost $8.29 billion, while Bank of America lost $2.39 billion – were sobering reminders that the sagging economy is aggravating the problems that began with the mortgage crisis in 2007.

Citigroup, among the hardest hit by the ongoing credit and mortgage market turmoil, said it plans to separate its traditional banking business from its riskier operations. Earlier in the week, Citi agreed to sell a majority stake in its brokerage business to Morgan Stanley as it looks to streamline and shed assets.

Amid the uncertainty about financials, investors were buying consumer stocks like Wal-Mart Stores Inc., McDonald’s Corp. and Procter & Gamble Co. Some tech stocks were among the gainers, including Intel Inc. and Microsoft Corp. After two weeks of selling, many stocks are looking much more attractive.

The indexes were down for the week, the result of selling in response to weak economic data and fears that fourth-quarter earnings reports, which begin next week in earnest, will point to a prolonged recession.

“We continue to see a tug of war between what has been some really bad economic data in recent weeks and optimism that the economy and financial markets are likely to stabilize and improve as we head through 2009,” said Michael Sheldon, chief market strategist at RDM Financial. “There clearly are a lot of crosscurrents in the market.”

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