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Wall Street Closes with Losses Amid Mixed News on Economy and Banks

Strategic Insights

— 2 min read

Wall Street's main indexes posted losses Wednesday, despite early gains driven by Bank of America's success in raising $13.47 billion through a stock offering. The Dow Jones Industrial Average closed at 8,422.04, down 52.81 points, while the Standard & Poor's 500 Index and the tech-heavy Nasdaq Composite Index also fell. The mixed news on the economy and banks was led by Treasury Secretary Timothy F. Geithner, who told Congress that the economy is beginning to heal but that the Obama administration is far from an exit strategy. Geithner also stated that the 19 banks have raised or plan to raise $56 billion to repay the government bailout, with about $48 billion from the 10 undercapitalized banks.

Key Takeaways:

  • The Dow Jones Industrial Average closed at 8,422.04, down 52.81 points, while the Standard & Poor's 500 Index and the Nasdaq Composite Index also fell.
  • Bank of America reported raising $13.47 billion through a stock offering in 12 days, meeting the government's demand for additional capital.
  • The bank was among 10 banks required to raise money, according to the stress test results released May 7.
  • Regions Financial Corp. plans to raise $1.25 billion in capital through a stock offering and sale of new preferred shares.
  • Treasury Secretary Timothy F. Geithner stated that the 19 banks have raised or plan to raise $56 billion to repay the government bailout, with about $48 billion from the 10 undercapitalized banks.
  • The economy is still contracting, although at a slower pace, and lingering concerns include consumer spending, tight credit, unemployment, and home values.
  • Investors were also focused on oil prices, which hit a six-month high at $61 a barrel due to a recent decrease in U.S. oil supplies.
  • Markets have recovered significantly from their 12-year low in early March, largely due to the favorable results of the stress tests and first-quarter bank earnings.

Statistics:

  • The Dow Jones Industrial Average closed at 8,422.04, down 52.81 points.
  • The Standard & Poor's 500 Index closed at 903.47, down 4.66 points.
  • The Nasdaq Composite Index closed at 1,727.84, down 6.70 points.
  • The 19 banks have raised or plan to raise $56 billion to repay the government bailout.
  • About $48 billion of that amount will come from the 10 undercapitalized banks.
  • The price of light, sweet crude on the New York Mercantile Exchange topped $61 a barrel, a six-month high.
  • Markets have recovered over 30 percent since hitting a 12-year low in early March.

Sources:

  • Joseph Weber, THE WASHINGTON TIMES
  • Wall Street Journal
  • CNN Money
  • Reuters
  • Associated Press
  • Bloomberg News
  • Forbes

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