Wall Street fell today as investors digested more signs of economic weakness.
NEW YORK — Stocks fluctuated today, falling sharply in the last hour of trading, as investors digested more signs of economic weakness, including a huge round of layoffs in the financial sector.
At the close, the Dow Jones industrial average was off 223.73, or 2.6 percent, at 8,273.58.
The Standard & Poor’s 500 index fell 22.54, or 2.6 percent, to 850.75, while the Nasdaq composite index dropped 34.80, or 2.3 percent, to 1,482.05.
After last week’s turbulence that sent the Dow down nearly 340 points, investors found little solace in the latest news about layoffs and bailouts.
Most Read Business Stories
- The penthouse atop Smith Tower is on the rental market for the first time
- Washington state ‘literally failed workers,’ and fixing the unemployment system won't be easy
- Downtowns will be back, but Seattle has choices to make
- The wave of COVID-19 bankruptcies has begun
- Boutique cruise line Windstar will move its Seattle headquarters to Miami
In a signal that banks are still struggling in the wake of massive losses tied to bad mortgage debt, Citigroup is cutting 53,000 more jobs in the coming quarters. The company said that in addition to job cuts, it plans to lower expenses by about 20 percent and has reduced its assets by more than 20 percent since the first quarter of the year.
Investors were also nervously waiting to see whether the nation’s troubled automakers would get a bailout. Senate Democrats, who plan to introduce legislation today, want to use part of the $700 billion Wall Street bailout to help prop up Detroit’s Big Three carmakers: General Motors, Ford and Chrysler. A vote was expected as early as Wednesday.
Meanwhile, a better-than-expected reading on industrial production did little to boost investor sentiment. The Federal Reserve said today that industrial output rose 1.3 percent last month, after plunging in September by the largest amount in over 60 years. Economists, on average, had expected an increase of 0.2 percent, according to a survey by Thomson/IFR.
Still, the improvement wasn’t encouraging enough, said Anthony Conroy, managing director and head trader for BNY ConvergEx Group, adding that investors want a more concrete sign that the economy could be improving.
“I think we’re seeing a tremendous amount of bad economic data,” he said. “Earnings have basically hit a wall and don’t seem like they are coming back anytime soon.”
The moves today followed a massive sell-off last week that saw the Dow finish down 5 percent; the S&P 500 index down 6.2 percent; and the Nasdaq down 7.9 percent. The major indexes have fallen for four of the past five sessions.
Analysts believe the market is still searching for a bottom after last month’s huge losses, and that the pattern of volatility will continue for some time. Woody Dorsey, president of financial forecasting firm Market Semiotics, said the market is trapped in a seesaw behavior.
“It is a very technical trade,” he said. “The difficulty is there is no dominant positive or negative story that the market is operating on. … There’s nothing here that people can grab on to.”
In the meantime, investors are still faced with a barrage of bad economic news.
Wall Street was also disappointed by a lack of direction taken to resolve the global financial crisis at the meeting of Group of 20 international leaders in Washington, D.C., this weekend. However, the leaders did pledge to keep working together to provide loans to financial institutions.
In corporate news, Target today became the latest retailer to post dour results, citing lower sales at established stores as the reason for a 24 percent drop in profit. Lowe’s, meanwhile, said its third-quarter profit also fell 24 percent, better than expected, but it predicted a fourth-quarter profit below the average analyst forecast.
The reports follow a spate of disappointing earnings and forecasts from companies like Macy’s, Starbucks and Best Buy as they battle a severe pullback in consumer spending. Investors fear that Americans’ clampdown in spending — which accounts for about two-thirds of economic activity in the U.S. — will prolong a worsening economic slump.
Also today, the Bush White House stressed that it steadfastly opposes drawing funds from the bailout plan to help the nation’s automakers. The administration supports the idea of helping the struggling companies, but said the $25 billion that Democrats favor taking from the rescue plan should come, instead, from a Department of Energy program previously approved to develop fuel-efficient vehicles.
Meanwhile, the layoffs planned at Citigroup underscored the ongoing distress in the financial sector. The company said total head count is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The New York-based bank has posted four straight quarterly losses, including a loss of $2.8 billion during the third quarter.
The fallout from this year’s global credit crisis has claimed jobs on all corners of Wall Street, from hedge fund managers to floor traders and beyond. Some industry experts forecast the job losses could come close to 200,000 before the year is over.
On Sunday, Goldman Sachs said seven top executives, including Chief Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for 2008 amid the ongoing credit crisis.
Citi’s leaders may also go without bonuses this year — a move that would effectively amount to a substantial pay cut for the company’s executives.
Oil prices fell below $56 today and gasoline futures plunged to a new low as Japan joined a number of European nations in recession and provided even more evidence of a broad deterioration in demand for energy.
Light, sweet crude for January delivery dropped $2.11 to settle at $55.49 a barrel on the New York Mercantile Exchange. Gasoline futures fell 5 percent, or 6.45 cents to $1.1746 a gallon after earlier touching a 52-week low of $1.168.
In Asian trading, Japan’s Nikkei index rose 0.7 percent, despite a report showing the second-straight quarterly decline in gross domestic product — signaling a recession. Hong Kong’s Hang Seng Index fell 0.10 percent.
In European trading, Britain’s FTSE 100 fell 2.4 percent, Germany’s DAX index fell 3.3 percent, and France’s CAC-40 fell 3.3 percent.