Stocks fell Thursday, losing early gains as investors examined President Barack Obama's budget request and remained cautious about the outlook for the U.S. economy and banking sector. Stocks rose in the morning along with gains in the banking sector, but the advance lost momentum around midday and shares fell significantly in the last hour of trading. Obama outlined his federal budget plans for the next ten years, with a more detailed account due in April. The $3.55 trillion plan includes making permanent some tax breaks from the economic stimulus plan, ending certain tax breaks for the wealthy, and moving closer to a universal health-care system. The budget includes an additional $250 billion to stabilize the financial system, which Obama's economic advisors say would be the net cost of buying up to three times as much in bad assets. That would be in addition to the $700 billion bank rescue plan already in existence. In economic news, U.S. new-home sales plunged to the lowest level since the government began keeping records in 1963. Another report showed that weekly jobless claims rose to a new 26-year high last week. A third report showed orders for durable goods fell to a six-year low in January. Light sweet crude oil for April delivery rose $2.72 to $45.22 a barrel on the New York Mercantile Exchange. The U.S. dollar fell versus the euro and gained versus the yen. The Dow Jones industrial average fell 88.81, or 1.2 percent, to 7.182.08. General Motors (GM) reported a massive $9.6 billion quarterly loss, and its shares fell 8 percent. J.P. Morgan Chase said it expects steeper home-equity loan losses this year ant that it will cut up to 12,000 jobs, and its shares gained 6 percent. Citigroup is close to finalizing a deal for the government to increase its stake in the troubled bank to as much as 40 percent. Its shares fell 5 percent. The broader Standard & Poor's 500 index fell 12.07, or 1.6 percent, to 752.83. The technology-heavy Nasdaq composite index fell 33.96, or 2.4 percent, to 1,391.47. Yahoo shares gained on news that chief financial office Blake Jorgensen is leaving as part of a broader reorganization initiated by new chief executive Carol Bartz. The New York Stock Exchange composite index fell 40.15 to 4,713.02. The American Stock Exchange composite index rose 17.41 to 1,329.38. And the Russell 2000 index fell 8.49 to 392.95.
