Jobs, Corporate Reports Drag Down Stocks
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U.S. stocks posted the biggest weekly retreat since November after companies cut profit forecasts and rising unemployment spurred concern the recession is deepening.
Wal-Mart, Macy's and Gap slid more than 6 percent after saying earnings will trail analysts' estimates after the worst holiday season in 40 years. Intel, the largest semiconductor maker, had its biggest one-day drop in two weeks after sales missed forecasts. Alcoa lost 11 percent after saying Tuesday that it will cut output and fire 13,500 workers.
The Standard & Poor's 500-stock index declined 4.4 percent, to 890.35, the steepest drop since it fell to an 11-year low in November.
The Dow Jones industrial average slipped 4.8 percent, to 8599.18. The Nasdaq composite index lost 3.7 percent, to 1571.59.
"As long as people are concerned about their jobs or losing them, that has an effect on the economy and all the earnings," said Robert Weissenstein, chief investment officer for the Americas at Credit Suisse Group's private banking unit in New York.
Jobless rolls surged to 4.6 million, the most since 1982, the Labor Department said last week.
The unemployment rate climbed more than economists forecast, to 7.2 percent, in December, the highest in 16 years.
A gauge of retail companies in the S&P 500 dropped 1.9 percent as 20 of 27 members declined. Wal-Mart lost 9.8 percent to $51.58 after saying fourth-quarter profit will miss its earlier forecasts.
Gap dipped 7.7 percent to $12.99. Macy's, the second-largest U.S. department store company, lost 6.2 percent to $10.30. Both cut their full-year earnings projections.
Intel lost 6.9 percent to $14.15 after saying fourth-quarter sales dropped 23 percent, missing a forecast that it cut by $1 billion less than two months ago, as the global recession reduced demand.
Yields on short-term Treasury securities declined on speculation the recession is deepening. The two-year note's yield decreased to 0.75 percent from 0.82 percent.
The Treasury will auction $26 billion of three-month bills and $26 billion of six-month bills tomorrow. They yielded 0.10 percent and 0.26 percent, respectively, in when-issued trading. The Treasury will sell $22 billion of one-year bills and a to-be-announced amount of one-month bills on Tuesday.
-- Bloomberg News
