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Saturday, March 28, 2009

Wall St. 27 MAR 2009 >>> Profit-taking, bank caution halt market run-up

Wall Street capped a strong week on a down note on March 27 as investors booked profits in the wake of the recent upward surge and bank shares dropped after bank executives indicated March had been a tougher month for the industry than the previous two.

After a meeting with President Barack Obama, JPMorgan Chase & Co's Chief Executive Jamie Dimon said that March was "a little tough" in comments to CNBC. The bank's shares fell nearly 5 percent.
Bank of America Corp's top executive followed suit, saying the No. 1 U.S. bank's trading book lagged the two prior months in March.

The gloomy comments on bank profits contrasted with statements earlier in the month that had helped push the broad S&P 500 index up more than 20 percent since it hit a 12-year low on March 9.

The change in mood on banks compounded a sell-off as investors booked profits created during the recent run-up. Heading into the day's session, the S&P 500 was at its most overbought position since May 2008, according to its 50-day relative strength index.

"Given that's kind of where this rally started in the second week of the month with Citigroup and Bank of America indicating they had a good first two months (of 2009), it would make sense that his comments would have a negative impact," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.

Citigroup fell 6.8 percent to US$2.62 while JPMorgan Chase shed 5.8 percent to US$27.40. The KBW bank index fell 3.28 percent on the day, but the index remains up nearly 56 percent from its March 6 low.
The Dow Jones industrial average fell 148.38 points, or 1.87 percent, to 7,776.18. The Standard & Poor's 500 Index shed 16.92 points, or 2.03 percent, to 815.94. The Nasdaq Composite Index slid 41.80 points, or 2.63 percent, to 1,545.20.

For the week, the blue-chip index rose 6.8 percent, the S&P 500 gained 6.2 percent and the Nasdaq rose 6 percent.

The S&P 500 is still down nearly 10 percent this year and has shed 47.9 percent since hitting its all-time high in October 2007.
Tumbling oil prices sank energy shares as well, putting Exxon Mobil and Chevron among the Dow's top drags.

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