Monday, February 23, 2009

Major stock market indexes fall to 1997 levels

Major stock market indexes fall to 1997 levels
By TIM PARADIS – 2 hours ago

NEW YORK (AP) — Wall Street has turned the clock back to 1997. Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since May 7, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997. It's as if the decade's dot-com surge, collapse and subsequent recovery never occurred.

The Dow is just over 100 points from 7,000. Both indexes have lost about half their value since hitting record highs in October 2007.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.

Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.

"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."

The Treasury and other agencies issued a statement after The Wall Street Journal reported Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.

"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."

Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.

"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.

The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. While falling to their 1997 levels, the major indexes plunged through the lows they reached in late November, at the height of the credit crisis.

"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."

The Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on May 7, 1997 when it finished at 7,085.65. The Dow hasn't traded below the 7,000 mark since October 1997. The index is down 14 percent over the past 10 sessions.

The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.

When the indexes were last at these levels, they were in their ascendancy, climbing amid the dot-com boom. But 1997 was also the year that saw stock prices later plunge amid a growing financial crisis in Asia. Far away from Wall Street, it was the year that the U.S. first heard the name Monica Lewinsky, whose relationship with President Bill Clinton led to his impeachment and trial. And it was the year that the world was stunned by the death of Britain's Princess Diana, on Aug. 31.

On Monday, the S&P 500 did close above its Nov. 21 trading low of 741.02. But the 14-month recession has decimated the major indexes: The Dow is down 49.8 percent from its record highs of October 2007, while the S&P 500 index is down 52.5 percent.

Detrick warned that a move below the S&P's Nov. 21 low could set off "violent selling" as even more confidence drains from the market.

The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.

Investors looking for a bottom also dumped smaller stocks. The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.

Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where consolidated volume came to 6.35 billion shares compared with heavy volume of 8.12 billion shares on Friday.

Morgan Smith, investment counselor for Burns Advisory Group, said investors are now pushing out their expectations for a recovery in the industry until after this year.

"Everyone is trying to grasp at some type of bottom," Smith said. "The market is just trying to figure out if it has priced in a worst-case scenario."

Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.

Other big losers included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.

Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.76 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.29 percent from 0.26 percent Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.

Fish pedicures banned

Fish pedicures banned

TALLAHASSEE - Having a school of small fish nibble away calluses may be one of the latest trends in beauty salons nationwide, but Tampa Bay residents looking to try out these “fish pedicures” will have to travel out of the state.

The Florida Board of Cosmetology banned the service from the state’s salons during its January board meeting, saying there’s no way to properly clean the pools of fish in between uses.

The service also violates the board’s rule against having animals in a salon for purposes other than assisting a disabled person.

A.J.'s Salon and Spa in Sarasota was one of the first places to offer fish pedicures in the Bay area. About 100 to 200 small carp filled each of its tanks, where clients would soak their feet for 15 to 30 minutes before getting their toenails painted.

Salon owner Johnny Tran said he tried to convince the board that the pedicures weren't unsanitary, but it didn't convince the group. He doesn't plan on fighting the issue further, he said.

"I did call them," Tran said. "I said, 'hey, I have a way to sanitize the fish,' and they don't buy it."

To keep the area clean, Tran said he drained and replaced the water in the tanks with each use, using a special formula to prevent bacteria from growing.

Now that the process has been banned, Tran says the only way he can attempt to recoup his losses is by sending the fish back to the vendor he bought them from in California and try to sell the tanks on Ebay.

The fish cost about $500 per tank, according to a FOX 13 report from 2008.

Losing this service means losing a competitive advantage, Tran says, and in an economic recession, that could make it all the more difficult to attract customers.

"People used to bring people from out of town and people out of the country to come here because it's unique," he said. "We don't have anything different than other salons [now]."

The pedicure, which was popularized in Asia, involves putting one’s feet in a bowl or small tank. According to a report, the fish eat away at any dead skin on the feet, smoothing it as a pumice stone would.

Anyone caught offering fish pedicures will be subject to fines, the board said.

Copyright AP Modified,

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

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Official: Obama likely to name Locke to Commerce

Official: Obama likely to name Locke to Commerce

WASHINGTON (AP) — President Barack Obama's likely third pick for Commerce secretary is former Washington Gov. Gary Locke, a senior administration official said Monday.

Locke, a Democrat, was the nation's first Chinese-American governor when he served two terms in the Washington statehouse from 1997 to 2005.

Obama's expected choice of Locke arose less than two weeks after his most recent pick, Republican Sen. Judd Gregg of New Hampshire, backed out. Just over a week after Obama named him and he accepted, Gregg cited "irresolvable conflicts" with the policies of the Democratic president.

The official spoke on condition of anonymity because the announcement has not yet been made.

Obama originally gave the post, which requires Senate confirmation, to New Mexico Gov. Bill Richardson. He withdrew in January, before Obama took office, after the disclosure that a grand jury is investigating allegations of wrongdoing in the awarding of contracts in his state.

The Commerce post is typically not one of the more high-profile jobs in any administration. The head of the department oversees agencies responsible for the once-a-decade census, for oceans policy and for many aspects of international trade, among other things.

The administration recently took steps to assert greater White House control over the census. The outcome of the census has deep political implications, since congressional districts are drawn on the basis of population.

But in Obama's administration, the delay in getting a Commerce secretary has been top news in large part because it has been accompanied by other Cabinet troubles. He still does not have a Health and Human Services secretary, either. Former Senate Democratic leader Tom Daschle withdrew his nomination for that post amid a tax controversy.

The loss of Gregg for the Commerce job also highlighted the difficulty Obama has had reaching out to Republicans. Gregg would have been one of three Republicans Obama had put in his Cabinet to emphasize his campaign pledge that he would be an agent of bipartisan change. Despite those and other efforts, Obama drew hardly any GOP support for his main legislative priority, the stimulus package.

Locke, 59, was born into an immigrant family and lived in a Seattle public housing project until he was 6. He graduated from Yale University, which he attended with a combination of scholarships and financial aid, and Boston University Law School.

Locke was briefly linked to the scandal over foreign contributions to President Bill Clinton's 1996 campaign. In July 1998, he gave a deposition to the House Committee on Government Reform and Oversight about his relationships with questioned Clinton donors. But the committee subsequently said the deposition produced no evidence that Locke knowingly accepted illegal campaign donations.

Locke denied any wrongdoing, and he subsequently returned some checks tied to people implicated in the fundraising scandal, including $750 from John Huang. The former Commerce Department official was the Democratic Party's chief fund raiser for the Asian-American population in the 1996 elections, and he became one of the central figures in the national Democratic Party fundraising scandal.

Also, in December 1997, Locke's political committee was fined a maximum $2,500 by state regulators after it admitted breaking campaign finance laws during two out-of-state fundraisers in 1996.

And in March 1998, state investigators cleared Locke of wrongdoing following complaints that he unlawfully took $10,000 in campaign contributions from members of a Buddhist church.

He lists among his accomplishments as governor a package of tax breaks that persuaded The Boeing Co. to assemble its new 787 jetliner in Everett, north of Seattle, and expanded transportation and construction budgets.

Since leaving office he's been working for the Seattle-based law firm Davis Wright Tremaine on issues involving China, energy and governmental relations. He argues that global engagement is a way to improve China's human rights record and deal with piracy of intellectual property.

Locke is married to Mona Lee Locke, a former television news reporter who is now executive director of the regional affiliate of the Susan G. Komen Foundation, a breast cancer research and advocacy organization. They have three children.

Associated Press writers Jennifer Loven in Washington, Gene Johnson in Seattle and Curt Woodward in Olympia, Wash., contributed to this story.

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