Wall Street slides on economic, profit worry

Wall Street slides on economic, profit worry
Comment E-mail Print Share
First Published: Tue, Nov 11 2008. 09 08 AM IST
Updated: Tue, Nov 11 2008. 09 08 AM IST
New York: US stocks fell in tepid volume on Monday, as investors worried about the outlook for a raft of companies from General Motors to Goldman Sachs in a harsh economic environment, stifling early enthusiasm for a Chinese stimulus plan.
The financial sector led the way lower after Barclays Capital analysts said they expect Goldman Sachs to post a quarterly loss for the first time in its history due to steep equity market declines. Goldman’s shares lost more than 8%.
Dow component GM’s shares, meanwhile, fell to 62-year lows after Deutsche Bank lowered its equity value on the automaker to zero and a number of brokerages warned that GM and its rivals are burning through cash fast.
Stocks worldwide initially rose after China approved a $586 billion government spending package and said it would adopt a “moderately easy” monetary policy. But the euphoria fizzled fast in the United States as investors were inundated with negative headlines.
The Dow Jones industrial average fell 73.27 points, or 0.82%, to 8,870.54, while the Standard & Poor’s 500 Index dropped 11.78 points, or 1.27%, to 919.21. The Nasdaq Composite Index was down 30.66 points, or 1.86%, at 1,616.74.
After October’s drubbing, stocks have made effectively no headway in November, and traders noted volume has been fairly light so far this month.
Trading was low on the New York Stock Exchange, with about 1.14 billion shares changing hands, well below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.71 billion shares traded, also falling short ot last year’s daily average of 2.17 billion.
In another piece of worrisome news for the beleaguered financial sector, the cost of rescuing American International Group Inc jumped to $150 billion after a smaller bailout failed to stabilize the ailing insurance giant.
Google shares weighed on the Nasdaq after Barclays Capital cut its fourth-quarter revenue estimates on the Web search leader and lowered its price target on the stock, citing further macro weakness. Google shares fell 3.7% to $318.78.
Adding to the market’s jitters, major electronic retailer Circuit City was forced into bankruptcy just weeks before the holiday shopping season.
Goldman Sachs shares lost 8.5% to $71.21 on the NYSE after Barclays analysts said they expected the bank to post a fourth-quarter loss of $2.50 per share.
GM’s stock plummeted 22.9% to $3.36, dragging along rival Ford, whose shares declined 4.5% to $1.93. On Friday, both companies posted wider-than-expected quarterly losses.
China’s economic stimulus involves new government spending between now and 2010 and would focus largely on infrastructure and social projects.
McDonald’s Corp helped the Dow fare better than the S&P 500 and Nasdaq. The world’s largest hamburger chain said global sales at its fast-food restaurants open at least 13 months rose 8.2% in October, topping analysts’ targets.
McDonald’s shares rose 1.8% to $56.48.
The US bond market closed early on Monday, ahead of the Veterans Day holiday when it will be shut. The US stock market will be open as normal on Tuesday.
Declining stocks outnumbered advancing ones on the NYSE by more than 2 to 1 and on Nasdaq by about 5 to 2.
Comment E-mail Print Share
First Published: Tue, Nov 11 2008. 09 08 AM IST