LONDON (ShareCast) - Wall Street ended a volatile week on a down note. The morning’s gains were surrendered as profit-takers moved in and fears over more write-downs in the banking sector resurfaced.

The Dow-Jones industrial average closed 171 points lower at 12,207, while the broader based S&P 500 shed 21 points to close at 1,330. The NASDAQ Composite fell 34 points to 2,326.

Mortgage lenders Freddie Mac and Fannie Mae led the retreat on speculation that Republican senators are preparing to resist a provision in the recently agreed financial stimulus package that would increase the role of the government-sponsored mortgage companies.

In the banking & brokerage sector Morgan Stanley, Merrill Lynch and Goldman Sachs were the biggest fallers as investors again got skittish about the massive provisions banks are having to make for sub-prime related investments.

New Jersey bank Commerce Bancorp said delays in receiving loan repayments contributed towards a 47% decline in fourth quarter profits. The bank, which is in the process of being acquired by Toronto-Dominion Bank, said profit for the full year was down 53% to $140.3m.

Online brokerage E-trade reported a record loss in the fourth quarter but stormed higher after saying it expects to return to profitability in 2008.

Computer chip maker AMD was one of the worst performing blue-chips after credit ratings agency Fitch further downgraded its debt. Memory chip maker Micron slipped in sympathy.

Harley-Davidson hit the skids after announcing a 26% tumble in fourth quarter sales. The company indicated it expects earnings per share in 2008 to be at least $4; analysts had pencilled in EPS for 2008 of $3.86.

Burgeoning controversy over the efficacy of anti-cholesterol drugs marketed by Merck and Schering-Plough wounded the two drugs companies. The US Food and Drug Administration has launched an investigation into anti-cholesterol pills Vytorin and Zetia to “determine whether any further regulatory action is warranted.”

Medical equipment maker PerkinElmer catapulted higher on further consideration of yesterday’s results which came in above market consensus.

Confectioner Hershey saw its share price melt after it announced yesterday that fourth quarter earnings had slumped 65%. The company also reduced its earnings guidance for 2008.

Business software supplier Compuware was on the up after Piper Jaffray upgraded the stock to "buy" from "neutral" after yesterday’s results.

Plastic bottle maker Eastman Chemical floated higher on the back of a bullish trading update in which it forecast it would double current EPS by 2012.

Bond insurer Ambac Financial continues its volatile week. The company, which had its AAA insurance rating downgraded last week by Fitch Ratings, edged higher on hopes that a rescue package for the sector will be thrashed out by regulators and banks.

Diversified manufacturer Honeywell pleased the market with earnings at the top end of analysts’ estimates. Fourth-quarter earnings jumped 18%, helped by strong demand for airplane parts, thermostats and security systems.

Bulldozer maker Caterpillar crawled higher after earnings that were in line with expectations. The company said international sales had offset poor US demand and enabled it to post a 10% rise in fourth quarter earnings and sales.

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