Wall Street extends its decline

NEW YORK (AP) ‘ Wall Street extended its decline Friday as skittish investors unable to hold on to much optimism about the economy drew little comfort from President Bush’s stimulus plan.

Investors pulled back from a big early advance, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.

“It’s disappointed in the size of the economic growth package. Wall Street’s showing its displeasure,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group in Pittsburgh. “Honestly, I think the institutional investors understand the limits to the government’s ability to enact economic change.”

The Dow Jones industrial average, up more than 180 points in morning trading, in late afternoon was down 128.92, or 1.06 percent, at 12,030.29. The Dow plunged 306 points Thursday amid deepening pessimism about the economy.

The broader Standard & Poor’s 500 index fell 16.06, or 1.20 percent, to 1,317.19, while the technology-focused Nasdaq composite index dropped 17.07, or 0.73 percent, to 2,329.83.

The day’s volatility was likely increased by expirations on options contracts.

Disappointment with Bush’s plan came as investors were searching for those companies that might be weathering the economic slowdown well.

Some are indeed doing better than expected ‘ like International Business Machines Corp., which told Wall Street late Thursday to raise its 2008 profit estimates for the tech company, and General Electric Co., which posted a fourth-quarter profit rise Friday.

But many others are struggling. Washington Mutual Inc. reported a steep loss late Thursday for the fourth quarter, as Citigroup Inc. and Merrill Lynch did earlier in the week. With the banking industry trying to fix its shrinking portfolios and preparing for more distress in consumer debt, the economy may only have the government to fall back on ‘ and Wall Street didn’t hear as much as it wanted from Bush.

Steven Goldman, chief market strategist at Weeden & Co., contends Wall Street remains concerned about whether other economic troubles are lurking.

“It’s a culmination of factors that have been in existence for a while ‘ it’s the unknown,” he said.

Though GE and IBM earnings were promising, he said, “it’s that concern that earnings are OK today, but what about 6 months from now?”