The markets retreated on Monday as the Federal Reserve Bank of New York's general economic index dropped to minus 9.4 in June from minus 4.6. Readings below zero indicate manufacturing is shrinking. The decline was the backdrop to the U.S. government's latest capital investments into Lincoln National Corp. (NYSE:LNC) and Hartford Financial Services Group (NYSE:HIG). Overall, the Dow fell 187.13, or 2.13%, to 8,612.13, while the Nasdaq decline 42.42, or 2.28%, to 1,816.38.
Shares of Lincoln National fell $1.92, or 10.82%, to $15.83 as the Radnor, Pa.-based financial company will sell a $950 million stake to the government under the Troubled Asset Relief Program.
Meanwhile, Hartford said June 12 it will accept as much as $3.4 billion in U.S. bailout funds and sell $750 million of shares. The move prompted Standard & Poor's Monday to change its outlook on Hartford to stable from negative. Shellie Stoddard, an S&P's credit analyst,wrote:
"This rating action stems primarily from Hartford's participation in the U.S. Treasury Department's Capital Purchase Program under the Troubled Asset Relief Program (TARP). Participation in the program enhances Hartford's financial flexibility, which we had viewed as a considerable weak because of significant asset impairments and our prospective asset stress analysis."
- Gerald Magpily
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