- City Fajr Shuruq Duhr Asr Magrib Isha
- Dubai 05:26 06:44 12:11 15:09 17:32 18:50
Banks are not meant to lose money, but some of Wall Street's biggest commercial and investment banks announced billions of dollars of losses in the past week, sending US stock markets into a sharp tailspin.
Citigroup and Merrill Lynch, two of America's best-known financial franchises, announced combined quarterly losses of almost $20 billion (Dh73 billion) in recent days which they blamed on stricken US housing and mortgage markets.
Other banks including Morgan Stanley have also revealed multibillion dollar losses in recent weeks.
In the week to Friday, the benchmark blue-chip Dow Jones Industrial Average lost 4.02 per cent to close at 12,099.30. The Dow is down around 9 per cent for the year to date, underlying investors fears about economic uncertainty.
The tech-heavy Nasdaq composite fell 4.09 per cent to 2,340.02 while the Standard & Poor's 500 index shed 5.41 per cent to 1,325.19. Both indexes have also endured hefty losses in recent weeks.
"Benchmark (stock) indexes are now approaching bear markets, characterized by 20 per cent declines from highs," observed James Marple, an economist at TD Bank Financial Group.
The Dow has tumbled almost 15 per cent from a record high of 14,164.53 struck on October 9 last year.
President George W Bush announced the outlines of an economic stimulus plan on Friday as part of his administration's growing efforts to underpin economic momentum threatened by a two-year old housing downturn.
Bush called for Congress to act quickly on an economic stimulus plan worth around $140 billion (Dh511 billion) which analysts believe will continue tax rebates and breaks for businesses.
A financial credit crunch and rising energy costs have also raised concerns about economic growth and a growing chorus of analysts believe the world's largest economy is on the brink of a recession.
"The housing correction, capital market turmoil, and high oil prices together have caused our economy to slow materially in recent weeks," Treasury Secretary Henry Paulson said on Friday.
Paulson, a former chief executive of Goldman Sachs, said downside economic risks were rising, but voiced confidence in US economic resilience.
Market-watchers said Wall Street could expect a volatile ride in the week ahead, with the stock markets closed Monday in observance of the Martin Luther King, Jr. public holiday.
Some analysts said, however, that with Citigroup and Merrill's quarterly earnings reports out of the way, the wider corporate picture could improve in the coming week as companies like Johnson and Johnson, AT&T, McDonald's and Microsoft among others reveal their latest results.
"It is worth noting that the financial reports are always earliest in the reporting season and that the majority of the most feared reports will be over soon," said Dick Green, an analyst at Briefing.com.
The coming week promises to be light on economic news and most attention will focus on a government survey on December existing home sales due for release on Thursday.
Most economists expect homes sales to cool to a seasonally-adjusted 4.95 million units compared with 5.00 million in November which if confirmed will show the housing market remains under pressure.
Analysts said anticipation will likely build in the coming week ahead of a fast-approaching interest rate meeting of the Federal Reserve due to occur on January 29-30.
Fed chairman Ben Bernanke said earlier this month that fresh rate cuts might be needed to shore up US economic growth and some economists expect central bank policymakers will cut the key fed funds rate by half a percentage point.
The rate is presently anchored at 4.25 per cent following cuts totalling a whole percentage point that the Fed has unleashed since September.
Bond prices rose over the week as investors sought a safe haven from volatile stocks.
The yield on the 10-year Treasury bond declined to 3.648 per cent from 3.810 per cent a week earlier, while that on the 30-year bond fell to 4.297 per cent from 4.394 per cent. Bond yields and prices move in opposite directions. (AFP)
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