NEW YORK – Stocks fell on Friday as persistent worries about banks eclipsed news the government would announce a plan next week to prop up the housing sector by helping homeowners avoid foreclosures.
Initial enthusiasm over the prospect of relief on the housing front proved to be short-lived after the White House cautioned against unreasonable expectations and doubts lingered about how banks will cleanse their books of toxic assets.
The Dow on Friday had its lowest close since the bear market closing low of November 20, capping a week when financial stocks were repeatedly pummelled as the government's latest bank rescue plan failed to allay investor worries.
Shares of JPMorgan (JPM.N) shed 3.3 percent to $25.30 on Friday, making the stock one of the top drags on the Dow. The KBW Bank index (.BKX) fell 5.3 percent and ended down 14 percent for the week.
"The banks are still a concern, plus we have a long weekend coming up," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois. "There are people that may be deciding they want to be out of the market for a few days.
The market will be closed on Monday for the Presidents Day holiday.
The Dow Jones industrial average (.DJI) fell 82.35 points, or 1.04 percent, to 7,850.41. The Standard & Poor's 500 Index (.SPX) dropped 8.35 points, or 1.00 percent, to 826.84. The Nasdaq Composite Index (.IXIC) shed 7.35 points, or 0.48 percent, to 1,534.36.
Only three of the Dow's 30 components finished higher.
For the week, the S&P 500 was down 4.8 percent for its worst weekly showing since the bear market low of late November.
Britain's Lloyds Banking Group (LLOY.L) stoked banking sector concerns after it said its HBOS unit had a pretax loss of 8.5 billion pounds ($12.3 billion) for 2008, driven by 7 billion pounds loans, raising fears that the already partly nationalized bank will need further state help.
Some big manufacturers, however, moved higher, on expectations they will benefit from the $787 billion economic stimulus plan that the U.S. Congress is expected to approve later on Friday.
Planemaker Boeing (BA.N) climbed 1.6 percent to $40.48, while United Technologies (UTX.N), the world's largest manufacturer of elevators and air conditioners, added 0.4 percent to $47.09.
Consumer stocks dropped on skepticism whether consumers will rush to spend the tax cuts that are part of the $787 billion stimulus package; the U.S. House of Representatives approved the package on Friday afternoon and the Senate was due to vote on the bill starting at 5:30 p.m. (2230 GMT).
U.S. consumer confidence in February fell to its lowest level in three months as sentiment grew increasingly gloomy over an economic downturn that most expected to last more than five years, a survey showed on Friday.
Wal-Mart Stores Inc (WMT.N) shares fell 3.3 percent to $46.53, making it the top drag in the Dow. Home Depot (HD.N) dropped 3.5 percent to $21.22. The S&P Retail index (.RLX) slid 2.1 percent.
The Nasdaq was weighed down by a decline by Research in Motion (RIM.TO)(RIMM.O) after Credit Suisse its rating on the stock to "underperform" from "neutral" as it forecast lower average selling prices for the BlackBerry.
Volume was light on the New York Stock Exchange, where about 1.24 billion shares changed hands, below last year's estimated daily average volume of 1.49 billion shares. On the Nasdaq, about 2 billion shares traded, also below last year's daily average of 2.28 billion.
Decliners outnumbered advancers on the NYSE by a ratio of about 3 to 2, while on the Nasdaq, the ratio was about five to four.