Stocks retreated again today as evidence mounted that Hurricane Katrina did more damage to the economy than investors had realized.
Delta and Northwest airlines spent the day circling bankruptcy court and both landed there after the bell. Their last hope for avoiding Chapter 11 was wiped out by the record fuel prices caused by the storm. Delta and Northwest joined United and US Airways in bankruptcy.
Bank failures could be the next shoe to drop. Community bankers from Louisiana and Mississippi came to Washington today to warn that they face massive losses because of loans made on homes and small businesses that were wiped out by the storm--and not fully covered by insurance.
Also rattling Wall Street today was the government's report on August retail sales, which took their worst hit in four years, falling 2.1 percent. Auto sales dried up as Detroit's "employee discounts" lost their appeal, falling 12 percent.
Based on Tuesday's warning from Best Buy that sales are softening, the retail outlook could get grim going into the crucial Christmas season. Department store and discounter stocks fell today, led lower by Wal-Mart, Target and Federated Department Stores, operator of the Hecht's, Bloomingdale's and Macy's stores in the Washington area.
The market was also jolted by news out of the Frankfort Auto Show, where Ford announced an executive shakeup and revealed that more plants will have to be closed to bring the company's production in line with its sales.
Hope that oil prices would ease were dashed by the latest report on fuel inventories, which showed a big drop, boosting prices back toward their record highs.
The Nasdaq Stock Market also was weighted down by plans of Google to sell millions of new shares--potentially flooding that market.
The Nasdaq composite index fell 22 points to 2,149.33. The 1 percent drop was twice as much as the losses by the Dow Jones industrial average, which fell 53 points to 10,544.90, and the Standard & Poor's 500 stock index, which slipped 4 points to 1,227.16.