Stocks open lower; BofA jumps on Buffett deal

By Matthew Craft

Associated Press

Published: Thursday, Aug. 25 2011 8:30 a.m. MDT

In this photo take Aug. 24, 2011, traders Fred Demarco, left, and Jonathan Corpina, right, work on the floor of the New York Stock Exchange. World stock markets rose Thursday, Aug. 25, 2011, as worries eased that the U.S. might be slipping toward recession, while the resignation of Steve Jobs _ the creative force behind Apple Inc. _ sent ripples through the technology sector.

Richard Drew, AP Photo

Enlarge photo»

NEW YORK — Stocks fell in morning trading Thursday, giving up early gains. Bank of America Corp. led other bank stocks higher on news that Warren Buffett is investing $5 billion in the bank.

BofA jumped 17 percent in early trading. The bank had lost half its value this year as investors grew worried about its need to raise capital and its liabilities related to subprime mortgages.

The news of Buffett's investment drove other bank stocks higher. Morgan Stanley and Citigroup Inc. jumped more than 6 percent.

Most other stocks turned lower. Financial stocks were the only one of the 10 industry groups in the Standard & Poor's 500 index to rise.

The Dow Jones industrial average fell 109 points, or 1 percent, to 11,211 in morning trading. It had been up 85 points shortly after the opening bell.

Apple Inc. fell more than 1 percent after co-founder and CEO Steve Jobs resigned late Wednesday. Jobs' departure was expected because of his health problems. Richard Gardner at Citigroup recommended investors buy the stock.

The S&P 500 index fell 10 points, or 0.9 percent, to 1,167. The Nasdaq fell 25 points, or 1 percent, to 2,441.

The price of gold continues to fall, sinking $17 to $1,740 an ounce. Gold plunged $104 an ounce Wednesday.

Gold's 5.6 percent drop on Wednesday was the steepest in more than three years. Pressure to sell is coming from new rules in China and in the U.S. requiring traders to set aside more collateral when borrowing money to buy gold. The price of gold hit its latest record of $1,891.90 an ounce Monday.

Earlier Thursday, the government reported an increase in the number of first-time claims for unemployment benefits last week. The Labor Department said applications for benefits rose to 417,000, the highest in five weeks. The figure was inflated a strike at Verizon, which ended earlier this week.

The S&P 500 index, the benchmark for most money managers, has gained 4 percent this week but is still down 9 percent this month.

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