Virginia stocks fall along with U.S. market
- September 15, 2008
Virginia stock prices fell Monday as U.S. stocks plunged in the wake of financial turmoil over the weekend.
In what became the worst trading day since 9/11, the Dow Jones Industrial Average fell 504 points, or 4.42 percent. Virginia stocks followed suit. All but two of the state’s largest public companies ended down Monday from Friday’s market close.
Some of the day’s biggest drops came from coal producers Alpha Natural Resources, whose stock dropped 21.32 percent to $55.34, James River Coal Co., whose stock fell 14 percent to $24.0, and Massey Energy Co., which closed at $37.35, down 16 percent. Power company AES fell 9.85 percent to close at $12.89, student loan lender SLM’s stock fell 14 percent at $12.40 and Media General fell 20 percent to $8.54.
World markets were expected to plunge after a devastating weekend for the U.S. finance industry. Lehman Brothers, the country’s fourth-largest investment bank, filed for bankruptcy Monday morning after federal officials failed to intervene this weekend. The investment bank suffered billions of dollars in losses during the fallout of the subprime mortgage market. In addition, Bank of America agreed to buy Merrill Lynch for $50 billion. The stock brokerage also was reeling from losses in the mortgage industry. The nation’s largest insurer, AIG, had asked the Federal Reserve for a $40 billion bridge loan to avoid a downgrading from credit agencies. The New York State Insurance Department announced Monday the company ‘s subsidiaries could lend it $20 billion.
Al Broaddus, former president of the Federal Reserve Bank of Richmond, told Virginia Business today that the federal government likely didn’t bail out Lehman for two primary reasons. One, the government last week said it would use taxpayer money to inject capital into mortgage giants Freddie Mac and Fannie Mae. “Against that background, naturally they were not eager to enlarge this potential liability for taxpayers,” Broaddus said.
In addition, saving the firm could cause future financial institutions to conduct riskier behavior, Broaddus said. “If the government is seen as readily willing to step in and resolve these kinds of problems with taxpayer funds, it creates incentives in financial markets to take even greater risks.”
Following are the stock prices of Virginia’s largest 15 companies when Monday’s market closed:
Altria Group, down 19 cents, $20.97
General Dynamics, down $1.02, $83.91
Dominion Resources, down $1.39, $41.72
Smithfield Foods, down $1.45, $20.65
AES, down $1.33, $12.89
Gannett, down $1.21, $16.32
MeadWestvaco, down $1.01, $26.64
Owens & Minor, down 37 cents, $45.25
NVR, down $25.15, $584
Advance Auto Parts, down $1.46, $40.26
Circuit City, down 4 cents, $1.63
Capital One, down $1.24, $44.70
Genworth Financial, down $1.25, $13.86
Norfolk Southern, down $2.10, $65.87
Carmax, down 46 cents, $15.20
Robert Powell and Paula Squires contributed to this report.