NEW YORK (Reuters) - Stocks fell on Friday as nervousness abounded about when Congress would pass a $700 billion financial sector rescue and Washington Mutual became the largest U.S. bank failure in history.
Technology shares slid after BlackBerry maker Research In Motion RIM.TORIMM.O, seen as a bellwether for the sector, warned that quarterly profit will fall short of Wall Street’s forecasts. RIM’s shares lost more than 26 percent.
Energy companies were another drag, tracking a drop in crude oil prices after government data pointed to more economic weakness.
Negotiations on the financial rescue plan have grown increasingly acrimonious and descended into chaos overnight. The Treasury Department wants authority to mop up assets that banks are struggling to value, but it has been a tough sell on Main Street, where many voters see it as a taxpayer-funded bailout of wealthy Wall Street.
But investors held out some hope that the financial system will still get its rescue package, after President George W. Bush said that while there were disagreements on parts of the bailout plan, Congress will end up passing it. That hope helped limit the market’s losses.
“When the story broke last night that the deal was dead, that significantly hurt the market. But with the comments this morning, it is looking a bit more likely that something might still get done,” said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama. “We’ll see how long it takes to get an improved bill passed ... which may be more palatable to the electorate.”
The Dow Jones industrial average .DJI fell 77.33 points, or 0.70 percent, to 10,944.63, while the Standard & Poor's 500 Index .SPX was down 17.97 points, or 1.49 percent, at 1,191.21. The Nasdaq Composite Index .IXIC was down 37.71 points, or 1.72 percent, at 2,148.86.
RIM shares tumbled $25.98 to $71.55 on Nasdaq, while shares of iPhone-maker Apple Inc (AAPL.O) shed 4.3 percent, or $5.71 to $126.21.
In the energy sector, shares of Chevron Corp (CVX.N) , were among the Dow’s top drags, falling 2.6 percent to $85.16 on the New York Stock Exchange as U.S. front-month crude oil dropped $3.02 to $105.00 a barrel.
Wachovia Corp WB.N , one of the largest U.S. banks, was among financial shares taking a hard fall, sinking 25.1 percent to $10.26. Shares of Citigroup (C.N) declined 5.7 percent to $18.30. The S&P financial index .GSPF was off 2.2 percent.
The Commerce Department said GDP, the measure of total goods and services output within U.S. borders, expanded at an annual rate of 2.8 percent in the April-June quarter, down from a rate of 3.3 percent it estimated a month ago.
Reporting by Kristina Cooke; Editing by Jan Paschal