NEW YORK — U.S. stock indexes on Friday declined for a third consecutive day, with the Dow Jones industrial average obliterating a more than 300-point gain as fears intensified that the $700 billion bank rescue plan won’t unfreeze credit markets.
“Indicators on the credit market are showing signs of improvement today, although conditions remain extremely strained. The lack of improvement in the credit markets is making it difficult for equity investors to regain confidence,” said Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co.
The Dow Jones average hit session highs as House members began to vote, rising more than 300 points, only to scale back as the measure passed.
The Dow closed at 10,325.38, down 157.47 points and tallying a weekly loss of 7.4 percent.
Twenty-one of the blue-chip index’s components finished in the red, with the bleeding led by Citigroup Inc., losing 18.4 percent after the surprising announcement that Wells Fargo & Co. would buy Wachovia.
Bank of America Corp. shed earlier gains to slide 5.2 percent.
Citi objected to the $15 billion stock-swap merger agreement between Wells Fargo and Wachovia, saying that Wachovia was not permitted to talk to other potential suitors.
Merck & Co. gained the most, up 2.2 percent.
The S&P 500 fell 15.05 points to 1,099.23, with consumer discretionary and informational technology fronting the losses among the index’s 10 industry groups.
The S&P 500 closed down 9.4 percent on the week.
The Nasdaq Composite fell 29 points to 1,947.39, giving it a 10.8 percent decline from last Friday’s close.
Trading volume topped 1.4 billion shares on the New York Stock Exchange, with declining stocks edging past advancers 2-1. More than 1 billion shares traded on the Nasdaq, where decliners passed advancers 5-2.
House lawmakers voted 263-171 to pass a revised version of the historic bill.
“The importance of the rescue plan is that, over time, borrowers and lenders as well as financial markets and individual investors should gradually start shifting their outlook from what could go wrong to what could go right,” said Michael Sheldon, chief market strategist, RDM Financial Group Inc.
Treasury prices gained, pushing yields lower, with two-year note yields falling 2 basis points to 1.606 percent.
Oil fell, with benchmark crude futures falling 9 cents to close at $93.88 a barrel on the New York Mercantile Exchange.
Gold futures swung between gains and losses, but the contract for December delivery ended down $11.10, or 1.3 percent, at $833.20 an ounce.
On Thursday, U.S. stocks dropped sharply as jobless claims and factory-orders data overshadowed the Senate passage of the rescue plan.
