NEW YORK: U.S. stocks capped their worst three-day slide in 10 months on Friday, Jan 22 on fears the White House's plan to curb bank risk-taking would cut profits, and tech shares slumped after Google Inc's disappointing results, according to Reuters.
Uncertainty about the Senate's confirmation of Ben Bernanke for another term as the Federal Reserve's chairman also rattled investors in a week when political squabbles helped erase stocks' gains for 2010.
"Between uncertainty over Bernanke, Obama's bank regulation proposal and the election in Massachusetts, the market is like a cork in the water and the Democrats just hit the flush," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "It looks like we're headed really low."
Since the Democrats lost their 60-vote hold in the Senate with the election of a Republican in Massachusetts on Tuesday, there is a growing sense among investors that political uncertainty has all but ended the rally that began in March.
Financials and TECHNOLOGY  shares endured the brunt of the selling, with JPMorgan off 3.4 percent at $39.16, Goldman Sachs down 4.2 percent at $154.12 and Google sliding 5.7 to $550.01, a day after the Web search company posted quarterly revenue that missed some forecasts.
The Dow Jones industrial average dropped 216.90 points, or 2.09 percent, to 10,172.98. The Standard & Poor's 500 Index slid 24.72 points, or 2.21 percent, to 1,091.76. The Nasdaq Composite Index fell 60.41 points, or 2.67 percent, to 2,205.29.
U.S. President Barack Obama unveiled his bank proposals on Thursday, saying banks should no longer be allowed to own, sponsor or invest in hedge funds for proprietary profit. Proprietary trading -- when a firm uses its own money to make bets on markets -- has been a profit engine for some major banks.
The proposals must receive congressional approval.
For the week, the Dow dropped 4.1 percent, the S&P 500 lost 3.9 percent and the Nasdaq tumbled 3.6 percent. It was the worst week for the S&P 500 and Nasdaq since October and the worst week for the Dow since March.
Stocks hit session lows late in the day on news that Britain had raised its international terrorism threat level.
The S&P 500 registered its worst 3-day slide since March 2009, around the start of the recent rally that sent both the S&P 500 and the Dow to 15-month highs as recently as Tuesday.
The Dow and the S&P 500 are now off more than 2 percent year-to-date, while the Nasdaq has shed almost 3 percent.
The selling of the past three days left the market's technical picture looking bleak after major indexes sunk below key support levels and their 50-day moving averages, a move considered a bearish signal.
In another sign of how rattled investors were, the CBOE Volatility index, a measure of Wall Street's sentiment, registered its biggest 3-day rise in nearly 3 years, increasing 55.4 percent.
Aside from worry about how the Obama proposals on banks, investors also fretted about China's efforts to prevent the world's third-largest economy from overheating.
Since China has led the nascent global economic recovery, any curbs it puts on lending threatens to slow demand that other economies rely on to spur their own growth.
Shares of multinationals and commodity-related companies also took a tumble, with Alcoa Inc off 6 percent at $13.40, Caterpillar Inc down 4.6 percent at $54.25. The S&P materials index declined 2.3 percent on the New York Stock Exchange.
On Nasdaq, Apple Inc was down 5.04 percent at $197.59, making it the biggest drag, followed by Google.
Other disappointing news on the technology front came from Advanced Micro Devices Inc, which warned that sales in the first quarter of 2010 will be down. Its shares tumbled 12.4 percent to $7.88.
The semiconductor index lost 5.3 percent.
Credit card company Capital One Financial Corp tumbled 12.1 percent to $37.53, a day after warning it faced tightening profit margins on loans it makes.
Capital One and American Express Co reported higher-than-forecast fourth-quarter earnings on Thursday but expressed concern about the growth outlook for credit cards.
AmEx shares were the Dow's top drag, falling 8.5 percent to $38.59. - Reuters