News that the government will raise its stake in Citigroup gave the bank's shares a big lift but failed to ease wider concern whether and when the banking sector will begin to recover. Driving the market to lows was a CNBC report late in the session that American International Group, the insurer that has already taken $150 billion in government funds, is asking for more money. CNBC said the insurer will post a $60 billion loss next week, a loss that will trip rating cuts and require it to raise cash.
Stocks fell very steeply with the S&P 500 down 3.5 percent to 743.33. Other markets were steady. The dollar ended at $1.2711 against the euro with the 10-year note little changed at 2.77 percent. Crude fell about 75 cents to end at $38.15. Momentum has come to a stop in the oil market though some are warning that falling demand will offset OPEC output cuts. Chinese trade data show a 10 percent year-on-year drop in oil imports during January. Gold held quietly under $1,000, ending at just over $996. There's talk that a move to the $1,005 level will trip a rush of buy stops that will quickly push it over the record $1,033.