Wednesday’s Market Recap: Stocks Lower On Weakening Housing Market

Reacting on undesirable news on the further weakening housing market as well as the start of the government’s tests to gauge their ability to withstand a long and deep recession lowered the market as a whole.  The Dow Jones Industrial Average (^DJI) fell -1.09% to a close of 7,270.89 while the Nasdaq (^IXIC) and S&P (^GSPC) fell  -1.14% and -1.07% respectively to closes of 1,425.43 and 764.90.  Crude oil was boosted on the day rising $2.48 to a close of $42.44 while gold lost $-17.30 to a close of $952.20.  Sales of previously owned U.S. homes plunged much more than expected January, pulling home builders down 2.1 percent.  The drop in gasoline inventories came in data from the U.S. Energy Information Administration that also showed a 1.7 percent rise in demand for the fuel over the four weeks ending February 20.

U.S. officials unveiled details today of how they plan to convert preferred shares the U.S. Treasury holds in hundreds of financial institutions into common stock that would help banks survive an even worse than projected economic downturn.  Under the plan, which includes “stress tests” aimed at measuring how the banks would hold up under both baseline and extreme economic situations, institutions would have six months to raise private capital before getting a government-issued capital buffer.

Nortel Networks Corp. (NT) plans to slash an additional 3,200 jobs world wide over the next several months, as the telecom-equipment vendor tries to restructure under bankruptcy-court protection.  The latest layoff announcement is in addition to 1,800 job cuts the Toronto company announced last year. Once Nortel completes all of the job cuts, the company’s work force will drop to about 25,000.

Washington Post Co. (WPO) reported a 77% decline in fourth-quarter net income on write-downs and buyout costs as its struggling newspaper and magazine operations which continued to weigh down strong performances in the education and cable divisions.  The company’s flagship, the Washington Post newspaper, wrapped up a difficult year on a negative note. Print advertising in the Post declined 21% in the fourth quarter due largely to the erosion of classifieds

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