Recession Concerns, Dismal Retail Earnings Spark Afternoon Sell-Off
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  | ||||||||||||||||||||||
Tuesday, November 18, 2008
Wall Street fell yesterday with investors absorbing more signs of economic weakness including more job cuts at Citigroup.
After spending most of the afternoon flat, stocks staged another sell-off during the last hour of trading. Investors continue to struggle to find confidence that the market has reached its bottom following months of severe losses.
The Dow Jones industrial average fell 2.6 percent, or 223.73 points, to close at 8273.58. It was led down by Alcoa, which fell 11 percent to $9.67 a share after UBS downgraded the aluminum makers stock.
The Standard & Poor's 500-stock index fell 2.6 percent, or 22.54 points, to close at 850.75, while the tech-heavy Nasdaq was down 2.3 percent, or 34.80 points, closing at 1482.05.
Citigroup fell 6.6 percent to $8.89 after announcing it would shed 50,000 positions, bringing its workforce to about 300,000. Its stock has lost nearly two-thirds of its value this year.
One of the Dow's few bright spots was General Motors, which gained 5.7 percent to $3.18 a share. After warning that it could run out of money next year, GM said yesterday that it would sell its 3 percent stake in Suzuki. Investors are also awaiting congressional action on a $25 billion emergency bill to bolster automakers.
"[GM] needs imminent help or there will be an unmitigated disaster," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. "GM's activities are global in scope, and GM's woes have foreign implications."
In a positive bit of economic news, industrial output rose 1.3 percent last month, after plunging by the largest amount in over 60 years in September, according to the Federal Reserve.
But that did little to offset concerns about a recession, which most economists surveyed by the National Association of Business Economics think has already begun. A dimmer projection for consumer spending accounted for most of the growing negative economic outlook, according to the survey.
That was reflected yesterday in another series of grim earnings reports from major retailers.
Discount retailer Target lost 4 percent to close at $31.68 a share after reporting a 24 percent drop in third-quarter profit. Lowe's lowered its fourth-quarter expectations as consumers delayed home-improvement projects and big-ticket purchases. Its stock rose 4 percent to $18.99.
Crude oil fell 3.7 percent to $54.95 a barrel.
