After the Citigroup stock swap with the government was announced at around 7:30 this morning, it looked as if stock markets would suffer a severe loss on the day.

S&P futures, which had already declined for the session, plunged to new daily lows and it looked as if a rout for equities was on. But the futures found another bottom about an hour later and stocks rose until about 2 p.m. before declining to finish at session lows and with a new closing low for the bear market which began back in October 2007.

The government's move to take a large stake in common shares of embattled Citigroup increased fears it will take a bigger role in overseeing some other troubled banks. Shares in Citigroup declined 42.28% to $1.42 while Bank of America lost 25% to $3.99, snapping a 4-day rally.

At Friday's close of floor trading on the NYSE the DOW was on 7062.93 with a loss of 119.15 points (-1.66%). The S&P finished on 735.99, down 17.74 points (-2.36%), its lowest close since December 1996. The technology-heavy NASDAQ closed on 1377.84 after falling 13.63 points (-0.98%).

The dollar traded in risk-aversion mode, finishing the session with gains of 0.61% on the euro, 1.19% against Australia's dollar and 0.07% on sterling as it fell 0.95% to the yen.

Treasuries were mixed as stocks declined, with traders buying the shorter end of the yield curve as they sold the longer end. Yield on the 2-year note fell 9.8 basis points to 0.986% while yield on the 10-year note gained 4.4 basis points to 3.031%.

Crude for March delivery was recently trading down 92 cents (-2.03%) to $44.30 per barrel.

Gold for April delivery was recently trading lower by $1.30 (-0.14%) to $940.50 per ounce after reaching a high on $1004.90 last Friday.

In a widely expected move, General Electric announced plans to slash its quarterly dividend 68% to 10 cents from 31 cents a share, beginning in the third quarter. The U.S. conglomerate also said that it had no plans to raise additional equity, and that reducing its dividend from 31 cents a share would save it about $9 billion a year.