Late Rally Stalls Out As U.S. Markets Finish Lower

July 11, 2008 5:50 p.m. EST

New York, NY (AHN) - All three major indices finished Friday lower, yet well off their lows as a late day rally was sparked by comments from Federal Reserve Chairman Ben Bernanke.

The Dow Jones Industrials briefly traded under the 11,000 level for the first time in two years as markets were pressured early on concerns of Freddie Mac and Fannie Mae's financial health. Both stocks shed roughly 50 percent of their value in early trading.

However, around 2:30pm, eastern, markets began to rally sharply from based on comments from Fed Chairman Ben Bernanke. The Chairman said that the Fed would open their discount window for the two lenders if needed; much as they did for the investment banks when they were in need of cash liquidity some months ago.

All three major indices rallied to positive territory for a brief moment before the sellers took control again coming into the weekend.

The Dow Jones Industrial finished lower 128 points or 1.1 percent while the S&P 500 shed 14 points or 1.1 percent. The Nasdaq Composite finished down 19 points or 0.8 percent on Friday. All three averages were lower for the week.

Crude oil booked another strong session, trading to a new high of $147.27, before settling at $145 a barrel.

Friday's session did see strength in select names as shares of Anheuser-Busch popped 8.6 percent on news that InBev sweetened their takeover bid to roughly $70 a share, BUD closed at $66.50.

Shares of specialty chemical maker, Hercules surged 25 percent after Ashland Inc. announced it would acquire the company in a cash and stock deal worth roughly $23 a share.

In economic news, the May trade deficit shrunk to $59.8 billion from the revised $60.5 billion in April.

"Earnings Season" ramps up next week with reports from big names like Intel, Google and Coca-Cola.