« Back to story "Dow drops another 275 on price, manufacturing news"

Comments for Dow drops another 275 on price, manufacturing news »

Posted By ap 1 year, 2 months ago in Business & Finance

NEW YORK (AP) _ The Dow Jones industrials fell more than 275 points, and all the major indexes were seeing wide swings. Wall Street remained tense Thursday, extending its huge slide as investors examined mixed economic and earnings data for clues about the economy.

In late morning trading, the Dow fell 276.62, or 3.22 percent, to 8,301.29 after falling as much as 372. Despite the Dow's recent drop, it hasn't fallen below its low during the last bear market, the closing level of 7,286.27 on Oct. 9, 2002.

Broader stock indicators declined in jittery trading. The Standard & Poor's 500 index fell 31.44, or 3.46 percent, to 876.40, and the Nasdaq composite index fell 42.98, or 2.64 percent, to 1,585.35.

Stocks wavered at the start of trading, seeking a direction after the previous session's steep dive, then turned sharply lower after a disappointing report on manufacturing. Wednesday's drop, which took the Dow down 733 points, followed a stream of bad economic news that underscored the likelihood that the country is either in a recession or will be in one — and that the downturn will be severe.

It was clear from Thursday's trading that the market will continue having extreme reactions to any economic news.

"I don't think the markets have a clear sense about the economic environment as of yet. They're clearly nervous," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates.

Investors initially appeared cheered by a better-than-expected reading from the Labor Department on consumer prices. The flat reading on September's Consumer Price Index compares with August's 0.1 percent decline, which was the first in nearly two years. The core index, which eliminates food and energy prices, rose 0.1 percent. Economists had been expecting CPI would rise to 0.1 percent and that core CPI would increase 0.2 percent. Investors are relieved to see any economic pressures ease on consumers.

Meanwhile, a weekly snapshot of the job market showed that first-time claims for unemployment declined last week. The Labor Department said claims for unemployment benefits fell 16,000 last week to a seasonally adjusted level of 461,000 — below the 475,000 that had been anticipated. Still, total unemployment remains above economists often associate with recession.

But the Philadelphia Federal Reserve said regional manufacturing conditions weakened in October. The bank's regional index came in at a negative 37.5 compared with a positive 3.8 for September.

Kumar said markets are jittery because many investors' expectations about the economy were too rosy heading into the summer and the monthlong freeze in the credit markets has dealt the economy another blow, making it harder and more expensive for many businesses and consumers to get loans.

He said the volatility buffeting the markets reflects investors tinkering with their portfolios to match their more sober take on the health of the economy and some investors simply cashing out. That means vehicles like mutual funds and hedge funds are entering a market already short on buyers and being forced to sell.

Because of investors' great anxiety about the economy, Wall Street is expected to remain extremely volatile, as it has been over the past month since the credit markets began tightening and stocks plunged. The gyrations this week have been particularly intense, with the Dow industrials soaring 936 points Monday and falling 733 Wednesday following a weak report on retail sales and a disheartening assessment of the economy from the Federal Reserve.

In Asian trading, Hong Kong's Hang Seng Index lost 4.8 percent, and Japan's Nikkei index dropped 11.41 percent, following the pattern of trading in the U.S. In afternoon trading in Europe, Britain's FTSE 100 fell 5.15 percent, Germany's DAX index fell 4.72 percent, and France's CAC-40 fell 5.71 percent.

While the credit markets are performing better than they were last week given several unprecedented actions by governments around the world — including the decision to buy stakes in private banks — they are hardly operating normally.

Treasury bills, considered the safest assets around, remained in demand. The three-month Treasury bill on Thursday was yielding 0.31 percent, higher than 0.20 percent on Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.93 percent from 3.98 percent late Wednesday.

Investors also were troubled by Citigroup Inc.'s third-quarter results, which, while better than the Street expected, were still a reminder of the banking problems that have contributed heavily to the faltering economy. The bank posted its fourth straight quarterly loss due to credit-related troubles and cut another 11,000 jobs. The company said it lost $2.8 billion, in the third quarter compared with a profit of $2.2 billion a year earlier. Citigroup fell $1.21, or 7.5 percent, to $15.02.

Merrill Lynch & Co., which recently agreed to be acquired by Citigroup Inc. rival Bank of America Corp., early Thursday posted a net loss of $5.1 billion. The loss was wider than analyst forecasts. Merrill fell 87 cents, or 4.8 percent, to $17.37.

The dollar was mixed against other major currencies.

Light, sweet crude for November delivery fell $3.90 to $70.64 a barrel on the New York Mercantile Exchange. On Wednesday, crude settled at $74.54, its lowest close since Aug. 31, 2007.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 648.3 million shares.

The Russell 2000 index of smaller companies fell 8.64, or 1.72 percent, to 493.47.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com