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MARKET SNAPSHOT: U.S. Stock Indexes Scale Back Stiff Losses |
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Written by cnn.com
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Thursday, 16 October 2008 |
U.S. stock indexes on Thursday trimmed losses but continued to extend the prior day's rout, after a measure of factory activity in the Philadelphia region swung sharply lower, confirming bleak views about the health and direction of the economy.
Rapidly shedding early gains, stocks fell steeply after the Federal Reserve Bank of Philadelphia reported conditions in the region's manufacturing sector deteriorated significantly in October. .
It was one of just several pieces of economic data that painted a grim picture.
"The financial markets are now in the process of adjusting for the dark period of economic activity that is now upon us, and data such as today's will further the process," said Tony Crescenzi, chief bond market strategist at Miller & Tabak.
After wavering first up and then down in triple-digit swings, the Dow Jones Industrial Average (DJI) settled into negative terrain, falling 119.95 points to stand at 8,457.96, but this was far from intraday lows that had the blue-chip benchmark down more than 300 points.
Among individual blue chips, shares of American Express Co. (AXP) and Home Depot Inc. (HD) were conspicuous losers, each down about 5%, with 25 of the Dow's 30 components posting losses at midday.
The S&P 500 (SPX) fell 30.92 points to 876.92, while the Nasdaq Composite ( RIXF) declined 42.87 points to 1,585.46.
Financials and telecommunication services led sector declines in a broad-based drop that stretched to include all 10 of the S&P 500's industry groups.
Volume on the New York Stock Exchange came to 743 million, with two stocks on the decline for each on the rise. On the Nasdaq, 604 million shares traded, and decliners beat out advancers by a margin of three to two.
Oil and gold were both on the decline, with crude futures lately off $4.84 at $69.70 a barrel, and gold futures down $37.50 at $801.50 an ounce.
Brief respite
Earlier, stocks had shown initial enthusiasm for a report that consumer prices were contained in September.
Separately, the Labor Department reported initial jobless claims fell last week, while the four-week average hit a seven-year high. .
In another report, the Federal Reserve said U.S. industrial production fell 2.8% in September, with hurricanes and a strike at Boeing Co. (BA) having an impact.
U.S. stocks crumbled on Wednesday in the wake of downbeat economic data -- notably the worst retail sales figures in three years. The Dow Jones Industrial Average dropped 733 points, the S&P 500 fell 90 points and the Nasdaq Composite lost 150 points.
"Stocks are not trading based on valuation, but as a source of cash," said Marc Pado, U.S. market strategist at Cantor Fitzgerald, of the prior day's declines, which had the Dow hit with its second-biggest daily point decline ever.
There also was a heavy slate of quarterly financial results to weigh through Thursday.
Merrill Lynch & Co. Inc. (MER) said it lost more than $5 billion and Citigroup Inc. (C) lost $2.8 billion in the third quarter. Bank of New York Mellon Corp. ( BK) and PNC Financial Services (PNC) posted lower quarterly profits as well.
Outside of financials, Nokia Corp. (NOK) reported a 30% profit drop and Harley-Davidson Inc. (HOG) tallied a 37% decrease, while United Technologies Corp. (UTX) managed to generate 6% profit growth for the third quarter.
Meanwhile, shares of eBay Inc. (EBAY) came under pressure, down 6.4%, as the auctioneer lowered its annual earnings outlook.
"We think the stock will remain under pressure, particularly as business trends on-site appear to have worsened dramatically in September, largely due to the structural issues facing eBay," said analysts at Deutsche Bank, who reiterated a sell rating.
After Thursday's close, Google Inc. (GOOG) and International Business Machines Corp. (IBM) are due to report.
In London, money-market rates declined after central banks gave $254 billion in emergency funds to calm credit markets and Switzerland provided funds to UBS (UBS), one of Europe's banks hit the hardest by global credit troubles.
Overnight, the Kospi dropped 9.4% in South Korea and the Nikkei 225 Average slumped 11.4% in Tokyo. European losses weren't as steep but were still hefty, with the FTSE 100 falling 5.1% in London.
(END) Dow Jones Newswires
10-16-08 1216ET
Copyright (c) 2008 Dow Jones & Company, Inc.
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