Админ » 22 окт 2008, 23:53
MARKET SNAPSHOT: U.S. Stocks Hammered, Fueled By Worries Of Global Slowdown
By Kate Gibson
U.S. stocks were pummeled again on Wednesday, as fears of a global recession sparked widespread selling of equities as well as commodities, with the Dow Jones Industrial Average tallying its 7th-largest point drop on record.
Worries of a worldwide recession stretched beyond the equities market, fueling more unwinding in the price of everything from oil, gold and copper. .
"It's liquidation selling. On Monday and Tuesday there was much more discrimination in what was being done. Today is more like a going-out-of-business sale. We've decided to get in cash, so everything must go," said Art Hogan, chief market strategist at Jefferies & Co.
Falling as much as 690 points in the final 15 minutes of trade, the Dow Jones Industrial Average (DJI) recovered slightly, ending at 8,519.21, down 514.45 points, or 5.7%.
All 30 of the blue-chip index's components ended lower, with the declines led by Alcoa Inc. (AA) off 13.4%.
"It's been a bad earnings season, and what companies tell us has not been inspiring. The news has been gloomy, and, if we believe executives, it is going to get even more gloomy," said Hugh Johnson, chairman of Johnson Illington Advisors.
Among the disappointing profit reports, Boeing Co. (BA) said a machinist strike helped push its third-quarter earnings down 37%.
Another Dow component bucked the negative trend, with fast-food giant McDonald's Corp. (MCD) posting an 11% rise in third-quarter profit.
The S&P 500 (SPX) declined 58.27 points, or 6.1%, to 896.78, with energy, financials and materials leading declines that stretched across all 10 of the index's industry categories.
Among the energy sector's greatest laggards, Consol Energy Inc. (CNX) was off 22.3%.
"The third quarter of 2007 was the start of the earnings debacle," said Johnson, noting the 4.8% drop marked the first time in 22 quarters that the S&P 500's operating results showed a decline in earnings on a year-on-year basis.
Six months ago, investors thought there was a chance that year-over-year earnings would again turn positive in the third quarter of 2008, said Johnson. "We're down 10.8% so far from [the] third quarter of 2007. The second piece of bad news is the number of positive surprises is down, and the number of disappointments is up."
The technology-laden Nasdaq Composite (RIXF) shed 80.93 points, or 4.8%, to 1,615.75.
Apple Inc. (AAPL) topped expectations but also stuck to its pattern of offering an outlook below analysts' forecasts. Apple rose 5.9%.
Earnings reports after the market closes include Amazon.com Inc. (AMZN), with at least one analyst advising a "moderately bearish position" on the online retailer.
"Amazon may issue cautionary forecasts for the holidays, so while third-quarter results may cause the stock to rally initially, it is likely fourth-quarter forecasts will dampen that spirit quickly," said Randy Frederick, director of derivatives at Charles Schwab.
Volume on the New York Stock Exchange topped 1.5 billion, and for every stock on the rise, six fell. On the Nasdaq, 1.1 billion shares traded, and decliners topped advancers, also by a 6-to-1 ratio.
Equities investors opted to ignore signs of improvement in the credit markets, with "short-term lending to the private sector starting to improve," said Johnson.
The reluctance to embrace what should be good news is likely due to nagging worries that the market has not seen the worst of the news on credit-related losses. "If that's true, we're not going to see a recovery in banking lending and in the global economy anytime soon," said Johnson.
Greenback gains
The dollar pulled strongly higher against the euro and the British pound. .
Asian stocks were hammered, with the Nikkei 225 skidding 6.8% in Tokyo as the dollar fell below the 100 yen level. .
In London, the FTSE 100 dropped 4.5%. .
On the New York Mercantile Exchange, gold futures fell $35.1 to $732.9 an ounce.
Oil fell for a second day, with crude futures dropping $5.43 to finish at $66.75 a barrel on the New York Mercantile Exchange. .
Treasury prices advanced, pushing 10-year note yields (UST10Y) to two-week lows, as investors worried about a global slowdown sought safety in government debt.
Financial follies
Shares of Wachovia Corp. (WB) fell 6.2% after the regional lender reported losing $23.9 billion in the third quarter. .
Chicago-based financial-services giant Northern Trust Corp. (NTRS) reported a quarterly loss of $129.4 million, calling the period "an extraordinarily challenging period for the financial services industry and world economy." .
Pharmaceutical giant Merck & Co. Inc. (MRK) announced 7,200 job cuts, Boeing (BA) said earnings fell 38% and Wachovia (WB) reported a $23.9 billion loss as Wells Fargo (WFC) prepared to buy the Charlotte, N.C., bank.
AT&T Inc. (T) reported a 5.5% profit rise, helped by 3G iPhone sales.
Yahoo Inc. (YHOO) advanced 2.7% after saying it would cut 10% of its workforce amid a sharp decline in quarterly profit. .
U.S. stocks closed lower Tuesday on cautious earnings outlooks, as well as profit-taking from Monday's surge. The Dow Jones Industrial Average dropped 231 points, the Nasdaq Composite lost 73 points and the S&P 500 dropped 30 points.
(END) Dow Jones Newswires
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