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US stocks pushed to a bear-market low as an expanded federal rescue of Citigroup and a dividend cut for General Electric hit even more of their share values and the broader market.
Worst February for Wall St since 1933
Pedestrians walk past the New York Stock Exchange. Picture: Bloomberg
In the last day of trading for February, traders did exactly what they had for most of the month, either selling out of or shorting large banking stocks.
Pacing off the session's decline, Citigroup closed down US96 cents, or 39 per cent, at $US1.50, after the US Treasury Department said it is willing to convert up to $US25 billion ($39 billion) of its preferred stock holdings into common stock in a move that would give the Government a 36 per cent share of the giant bank.
Over the last few weeks, concern that banks would need even more capital has weighed on share prices across the sector. And those few traders willing to even play in banking stocks are mostly holding short positions.
According to Data Explorers, a short-selling data research firm based in New York and London, 2.6 per cent of Citigroup is now out on loan, up nearly 38 per cent from just less than two weeks ago.
"I don't plan on buying any banks anytime soon. That industry is going to zero, some winners, some losers," said Keith Walter, a portfolio manager at Artio Global Investors.
With the slide for banking stocks, the Dow Jones Industrial Average closed down 119.15 points, or 1.66 per cent, at 7062.93, marking its lowest point since April of 1997 and surpassing its previous bear market low of 7114.78, hit on Monday. The index lost 302.74 points, or 4.11 per cent, for the week.