March 30 (Bloomberg) -- U.S. stocks slumped the most in three weeks as the Obama administration warned that some banks will need more government aid and that General Motors Corp. and Chrysler LLC have one last chance to restructure. Treasuries and the dollar gained.
Bank of America Corp. slid 18 percent and Citigroup Inc. sank 12 percent after Treasury Secretary Timothy Geithner said some banks will need “large amounts” of assistance. General Motors plunged 25 percent as Obama said GM and Chrysler must survive without becoming “wards of the state.” Alcoa Inc. tumbled 14 percent after Aluminum Corp. of China Ltd.’s profit decreased by more than 99 percent.
The Standard & Poor’s 500 Index fell 3.5 percent to 787.53, trimming its March rally to 7.1 percent. The Dow Jones Industrial Average tumbled 254.16 points, or 3.3 percent, to 7,522.02. The MSCI World Index of 23 developed countries lost 3.9 percent. About 10 stocks dropped for each that rose on the New York Stock Exchange, the broadest retreat since March 5.
“Whether or not there are banks at risk is still a serious concern,” said Bruce McCain, chief investment strategist at Cleveland-based Key Private Bank, which manages $22 billion. “When you’re looking for excuses to sell off, certainly those sorts of things are realistic worries. We may well go back and test the lows.”
The slide today trimmed the S&P 500’s advance from a 12- year low on March 9 to 16 percent, leaving it down 13 percent in 2009. Stocks had rebounded this month after Bank of America, Citigroup and JPMorgan Chase & Co. said they were profitable in January and February and Geithner detailed plans to purge banks of toxic assets. more...
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