By Kristina Cooke
NEW YORK (Reuters) -Wall Street ended its worst week in seven years with another tumble on Friday on fears that the $700 billion financial rescue package may not unblock credit markets and stave off a U.S. recession.
After much legislative haggling that roiled and captivated global markets for the past two weeks, the U.S. House of Representatives passed the bill on its second try and President George W. Bush signed it into law.
Financial stocks, which had traded sharply higher on the expectation the bill would be passed, fell after the House vote. Traders cited profit-taking and said the market was now focusing on the tough economic road still ahead and on how the bill will be implemented.
The S&P financial index fell 3.9 percent, while the three major indexes all fell more than 1 percent.
The monthly jobs report earlier in the day suggested the economy may be in a recession. U.S. employers cut 159,000 jobs in September, the ninth straight monthly reduction and the steepest decline in five and a half years.
"There's just a tremendous amount of anxiety out there and that's breeding volatility. People are concerned that the bailout won't unlock the credit markets, so people are taking a hard look at things," said Anthony Conroy, head trader for BNY Convergex, an affiliate of the Bank of New York.
"The economic data in the past few days has been bad and the outlook for earnings is fairly bleak. We got over one major hurdle with the rescue plan, but there's more to go."
The Dow Jones industrial average fell 157.15 points, or 1.50 percent, to 10,325.70, while the Standard & Poor's 500 Index slid 15.04 points, or 1.35 percent, to 1,099.24. It was the first time the S&P closed below 1,100 in almost four years.
The Nasdaq Composite Index was down 29.33 points, or 1.48 percent, at 1,947.39.
Three-month dollar Libor rates, key benchmark rates for the banking industry, climbed to 4.33375 percent, the highest since early January, while their euro-denominated equivalent surged to a record high.
It was a week of extreme volatility for the U.S. stock market. On Monday, the Dow posted is biggest point decline in history after the House of Representatives rejected an initial bank bailout plan, while the volatility index hit a record high. The S&P 500 on three days posted moves bigger than 4 percent.
The S&P 500 and the Nasdaq had their worst week since September 2001, and the Dow had its worst week since July 2002.
On Friday, shares of Wells Fargo fell 1.7 percent to $34.56 after the bank stepped in to buy Wachovia Corp, topping a government-backed Citigroup bid for some of the bank's assets. Wachovia's shares jumped 58.8 percent. Citigroup plunged 18.4 percent to $18.35.
The Dow Jones home construction index fell 6.6 percent, with D.R. Horton, the largest U.S. home builder, down 8.4 percent at $11.07.
Trading was moderate on the New York Stock Exchange, with about 1.42 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq about 2.51 billion shares traded above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2 to 1 and on the Nasdaq by about 3 to 1.
(Editing by Leslie Adler)
