Saturday, October 4, 2008

Stocks fall as economic woes overshadow bailout

Stocks fell, shedding earlier gains on Friday, as concerns about the economy overshadowed the U.S. House of Representatives' approval of the Bush administration's $700 billion financial rescue package.

Financial stocks, which had traded sharply higher on the promise the bill would be passed, fell after the House vote on profit-taking and as the market focused on the tough road that still lies ahead for the U.S. economy.

The monthly jobs report earlier in the day suggested the economy may be in a recession. U.S. employers cut 159,000 jobs last month, the ninth straight monthly reduction and the steepest decline in five and a half years.

"If we did not pass this package we would have been headed for a severe recession -- the market is still coming to grips that we are still heading for a recession. There is some reality about the economy here that is setting in," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

The Dow Jones industrial average was down 27.24 points, or 0.26 percent, at 10,455.61. The Standard & Poor's 500 Index was down 2.42 points, or 0.22 percent, at 1,111.86. The Nasdaq Composite Index was down 3.00 points, or 0.15 percent, at 1,973.72

Pado, however, added, "But I am encouraged. If we can get the credit markets to start to get back to normal -- it is not going to be instant, it will be a gradual thing -- but if credit comes back in line then that would be positive."

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