General Electric lost 5.8 percent after presenting what investors called a more sober” assessment of its earnings. Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. led financial shares to the biggest drop among the 10 main industry groups in the Standard & Poor’s 500 Index. American International Group Inc. slumped 22 percent as 19 states began probing its employee bonuses.
The S&P 500 tumbled 2 percent to 768.54, trimming its advance from a 12-year low on March 9 to less than 14 percent. The Dow Jones Industrial Average slid 122.42 points, or 1.7 percent, to 7,278.38. The Nasdaq Composite Index decreased 1.8 percent to 1,457.27. European shares rose and Asia’s regional benchmark closed lower.
How can you justify a 20 percent higher market when things haven’t gotten 20 percent better?” said Richard Campagna, who oversees $600 million as chief investment officer at 300 North Capital LLC in Pasadena, California. The economy may be bottoming, but it’s still struggling.”
Today’s decline came at the end of the market’s first back- to-back weekly advance of the year. The S&P 500 had rebounded as much as 17 percent from a 12-year low on March 9 as banking shares surged. The S&P 500 Financials Index had gained as much as 50 percent on speculation the worst of the financial crisis is over after Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. said they were profitable in January and February.
European stocks rose, capping the Dow Jones Stoxx 600 Index’s second straight weekly gain, as a rally in oil and metals producers offset a loss at Ericsson AB’s mobile-phone venture.
The Dow Jones Stoxx 600 Index added 0.4 percent to 172.58 after falling 1.3 percent. The gauge increased 2.4 percent this week as U.S. housing starts climbed 22 percent and the Federal Reserve said it will buy $300 billion of government bonds to combat the first global recession since World War II.
Asian stocks declined, led by banks and technology companies, after the benchmark index’s biggest weekly gain since August 2007 drove valuations to the highest in more than a year.
Japan’s stock market is closed for a holiday. The MSCI Asia Pacific excluding Japan Index dropped 1.1 percent to 233.51 as of 6:45 p.m. in Hong Kong, cutting its advance this week to 5 percent. The gauge that includes Japan has climbed 6.9 percent in that time, the most since the week ended Aug. 24, 2007, as banks including Barclays Plc and Standard Chartered Plc reported strong” starts to the year.
Hong Kong’s Hang Seng Index fell 2.3 percent to 12,883.51, while Taiwan’s Taiex Index lost 1.5 percent. Stock markets in Singapore, China, South Korea, Malaysia, Indonesia, Thailand and the Philippines advanced.