New York: US stocks suffered their worst decline in more than a month on Wednesday after a grim private-sector jobs report coupled with a revenue warning from top chip maker Intel Corp revived deep concerns about the economy.
Energy shares slid after data showed an abundance of crude oil inventory in the United States, the world’s largest energy consumer, with demand eroded by the economic slowdown. US crude futures slumped more than 12%.
Two days ahead of the US government’s key nonfarm payrolls report for December, a worse-than-expected private-sector jobs report highlighted the challenges facing President-elect Barack Obama as he makes plans for a large economic stimulus package.
Recession fears were heightened after Intel said its revenue for the fourth quarter would not meet the lowered forecast it had given in November, citing weakening demand for personal computers. Intel, the world’s biggest maker of the central processing units at the heart of every PC and a technology bellwether, was among the main laggards on the Nasdaq.
The Intel news compounded negative sentiment from aluminum producer Alcoa’s announcement late on Tuesday it would cut more than 15,000 jobs, halve capital spending and sell businesses to weather the global downturn.
The Dow Jones industrial average fell 244.68 points, or 2.71% to 8,770.42. The Standard & Poor’s 500 Index dropped 28.00 points, or 3% to 906.70. The Nasdaq Composite Index tumbled 53.32 points, or 3.23% at 1,599.06.
Chevron and ExxonMobil were among the primary weights on the Dow, while the S&P index of energy stocks dipped 3.8%. Chevron lost 4.4% to $73.96, while Exxon shed 2.6% to $78.25.
After five days of gains, technology shares were among the biggest weight on the market after Intel’s warning, indicating the heavy toll from the economic slump on both business and consumer spending.
Intel shares fell 6.1% to $14.44 on the Nasdaq, while Apple stock lost 2.2% to $91.01 and Microsoft stumbled 6 percent to $19.51.
The S&P 500 index of technology shares fell 3.7% and the semiconductor index was down 4.9%.
Obama, set to be sworn in on 20 January, has proposed the largest US infrastructure investment since the 1950s and massive tax cuts for consumers and businesses.
The new US Congress began work to pass a stimulus package. Obama expects to inherit a budget deficit approaching $1 trillion and says his administration will have to make tough budget choices.
The benchmark S&P 500 has risen 20% since its 21 November low.
Volume was light on the New York Stock Exchange, where about 1.17 billion shares changed hands, below last year’s estimated daily average of 1.49 billion. On the Nasdaq, about 2.03 billion shares traded.