Volatility kicked in again on Wall Street today, as the reality hit that few industries are safe from the consumer spending slump ...
NEW YORK — Volatility kicked in again on Wall Street today, as the reality hit that few industries are safe from the consumer spending slump — whether they’re building homes, making cars or selling coffee.
At the close, the Dow Jones industrial average was down 176.58, or 2 percent, to 8,693.96 after falling more than 300 earlier. The blue-chip index has not dipped below the 8,000 mark in trading since Oct. 10 but is down about 35 percent since the start of the year.
Broader stock indicators retreated as well, but rebounded off their lows. The Standard & Poor’s 500 index fell 20.26, or 2.2 percent, to 898.95; and the Nasdaq composite index dropped 35.84, or 2.2 percent, to 1,580.90.
The market managed to bounce off its lows of the day after a media report that a BlackRock executive said a $30 billion Bear Stearns mortgage portfolio could be worth more than its market value suggests. And in another promising sign for mortgages, the government and the mortgage industry announced the largest moves yet to help homeowners renegotiate hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
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But the market sold off again in late afternoon, acknowledging that although the mortgage crisis that spawned the current downturn is being addressed, the economy remains extremely troubled.
It’s becoming clear that it’s going to be hard to rely on the average consumer to pull the economy out of its downturn. Late Monday, Starbucks reported lower sales across the coffee chain, and early today, Toll Brothers posted a sharp drop in revenue and said it was too difficult to predict what the luxury homebuilder’s profit would be next year.
Investors are also jittery as the nation’s feeble automakers try to get a bailout from the federal government, much like the ailing insurer AIG has. General Motors, whose shares have plunged to 60-year lows, said late Monday it would cut 1,900 factory jobs on top of the 3,600 cuts it announced Friday.
There were no economic reports released today because the government and bond markets were closed for Veterans Day. But investors didn’t need government data to see that the economy’s downward slide isn’t over — the litany of troubling corporate news was enough. Wall Street has been anticipating grim results from corporate America, but it cannot gauge yet how bad they could get.
“We’re in a situation where we really don’t know how deep a recession we’re in,” said Jim Herrick, manager of equity trading at Baird & Co. “Until there’s some clarity on the economy and clarity with earnings, we’ll definitely be stuck in this trading range.”
One bit of good news today was that oil fell $3.08 to settle at $59.33 a barrel on the New York Mercantile Exchange, the lowest closing price since March 2007. After the market closed, crude tumbled briefly to $54.92 in electronic trading, a price not seen since January 2007.