Russell closes down 1.38%

Crystal D. Vogt | Feb 20, 2009 4:23pm EST | Comment

Rating: Unrated [rate it]

Stocks reversed the downward course they were forging during Friday trading, and pared some losses after the U.S. government put rumors of bank nationalizations to rest.

The Russell 2000 (NYSE:IWM) closed down 5.75, or 1.38%, to 410.96, while the Dow topped off Friday down 1.34% to 7,365.67, and the S&P 500 fell 1.14% to 770.05. For the year, the Russell is down 17.72%, the Dow is down 16.07% and the S&P 500 is down 14.75%.

Bank of America (NYSE:BAC) and Citigroup (NYSE:C), which have both lost more than about 90% of their value in the last year, saw shares nosedive to levels seen in the early 80s and 90s this afternoon on news that a nationalization of the banks was a likely possibility. Shareholders, fearing they would be wiped out if the rumors were true, pulled money out in droves and flocked to safe havens like bonds and gold, the latter of which rose above $1,000 per ounce today.

The Obama Administration doused the bank nationalization rumors, though, when White House press secretary Robert Gibbs commented that "that a privately held banking system is the correct way to go." The comments brought some relief to the market, which reversed course on the news.

A new report on consumer prices, which measures inflation, was also released this morning at 8:30 am ET. Economists predicted the Consumer Price Index likely rose by 0.3% last month, and the data turned out to be exactly in line with the predictions. The rise was the largest monthly increase in prices since July. (The CPI fell 0.7% in December after dropping 1.7% in November and 1% in October).

Small caps on the move today included Career Education (Nasdaq:CECO), which saw its Q4 earnings top expectations, sending shares up 20% at closing. Soapstone Networks (Nasdaq:SOAP) closed up 19% after the company announced it was reviewing strategic alternatives, and Maxwell Technologies (Nasdasq:MXWL) posted a higher fourth-quarter sales and gross margin, buoying shares 11.4% higher.

Chiquita Brands' (NYSE:CQB) Q4 loss widened, and the company froze executive salaries. Shares plunged over 40%.