Stocks fall but BAC up on Buffett's $5B

Stocks fell in late afternoon trading Thursday, erasing early gains. Bank of America Corp. led other bank stocks higher on news that Warren Buffett will invest $5 billion in the bank.

The rest of the market turned lower. Oil fell and Treasurys rose after the government said more people hit the unemployment line last week. Many investors were in a selling mood ahead of a speech Friday by Federal Reserve Chairman Ben Bernanke, which is expected to outline new plans for the U.S. economy.

The Dow closed down 170.9, 1.5. percent, at 11,149.8. The Standard & Poor's 500 closed down 18.3 points, 1.6 percent, at 1,159.3. The Nasdaq was off 48.1 points, 2 percent, at 2,419.6.

Apple Inc., the world's largest technology company, fell less than 1 percent on news of chief executive Steve Jobs resignation late Wednesday. Jobs' departure had been expected because of his health problems.

Bank of America jumped 9 percent. The troubled 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.

Other banks also rose after the billionaire investor lent his credibility to Bank of America. Morgan Stanley and Citigroup Inc. both rose more than 3 percent. Bank of America and American Express Co. were the only companies in the Dow Jones industrial average to rise.

This week's trading has been marked by a series of sudden reversals. Robert Stein, a money manager responsible for $1.2 billion at Astor Asset Management, said questions about the economy have made investors uncertain and the stock market more volatile. Gains made one day can quickly disappear the next.

"We're not seeing anything that's convincingly bearish enough to call another recession, but nothing optimistic enough to suggest that a recovery is going to regenerate," Stein said.

The S&P 500 index, the benchmark for most money managers, has gained more than 3 percent this week but is still down 10 percent this month. The Dow rose 503 points in the first three days of this week. It's down 8 percent this month.

Paul Zemsky, chief investment officer of ING Investment Management in New York, said this week's gains were a result of investors bargain-hunting after stocks had fallen too far over the past month, and traders who had bet against the market cashing in their winnings.

Zemsky expects to see more big swings as long as the fear of recession hangs over the market. "People are trying to adjust their positions to news," he said. "Once it's clear where the economy is headed, I think things will calm down."