US STOCKS tumbled for a second straight day as markets were roiled by US President Barack Obama's bank revamp plans and doubts on Federal Reserve chief Ben Bernanke's renomination provided a gloomy end to the week's trade.
The Dow Jones Industrial Average slumped 216.90 points (2.09 per cent) to 10,172.98, posting its third straight session of triple digit losses and its biggest weekly drop since February 2009.
The Nasdaq composite tumbled 60.14 points (2.67 per cent) to 2205.29 and the Standard & Poor's 500 index dropped 24.72 points (2.21 per cent) to 1091.76.
Investors sold ahead of the weekend as the financial sector vociferously opposed Mr Obama's plans unveiled on Thursday to limit the size and scope of US banks and finance firms in a new offensive against Wall Street excesses.
The measures would effectively force financial firms to choose between lucrative proprietary activities - trading in stocks and sometimes risky financial instruments for their own benefit - and traditional activities, like making loans and collecting deposits.
Start of sidebar. Skip to end of sidebar.
End of sidebar. Return to start of sidebar.
Analysts said the stock selloff over the last two days underscored market concerns. "The President might be on the right warpath to soothe the American public, yet the market is telling him to be careful about using regulatory weapons of mass destruction,'' said Patrick O'Hare of Briefing.com.
Also on Friday, doubts grew over Mr Bernanke's renomination as key Democrats voiced opposition, prompting a renewed expression of support from the White House.
"If he is not reappointed I think the markets would have a fit. Already we have seen that in the markets...what has happened in the last couple of hours is related to the events around Bernanke," said Nariman Behravesh, chief economist at IHS Global Insight.
Two members of Mr Obama's party announced they would vote against Mr Bernanke, underscoring a shift in the political landscape after the loss of a seat in Massachusetts that ended the Senate supermajority for the party.
Mr Obama believes the Senate will confirm Mr Bernanke, a White House spokesman told reporters travelling with the president en route to Ohio.
Beijing's moves to clamp down on lending to cool an overheating Chinese economy also dragged down the market amid concerns over possible easing of the the global economic recovery from recession.
"Frankly, we see China tightening as the biggest factor at work this week. Its actions are highlighting for market participants that the easy money that fuelled the 2009 rebound is going to be less easy to get in 2010," Mr O'Hare said.
Banking stocks extended their losses. Bank of America fell 3.68 per cent to $US14.90, Morgan Stanley by 5.25 per cent to $US27.80, JP Morgan Chase by 3.40 per cent to $US39.16 and Goldman Sachs by 4.20 per cent to $US154.12.
General Electric rose 0.56 per cent to $US16.11 after notching a stronger-than-expected net profit of $US3.0 billion in the fourth quarter, down 19 per cent from a year earlier.
Fast-food chain McDonald's rose 0.30 per cent to $US63.39 after its net profit jumped 23 per cent in the fourth quarter to $US1.216 billion.
Internet giant Google fell 5.66 per cent to $US550.01 despite a quarterly profit that surpassed expectations of most Wall Street analysts.
The bond market was mixed. The yield on the 10-year Treasury bond fell to 3.598 per cent from 3.611 per cent Thursday and that on the 30-year bond rose to 4.510 per cent from 4.506 per cent.
Obama calls for bank limitsMarket down at close
