WORLD> America
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WORLD> America
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Consumer spending worries send stocks lower
(Agencies)
Updated: 2008-11-12 10:22 Broader stock indicators declined as well. The Standard & Poor's 500 index fell 20.26, or 2.20 percent, to 898.95, and the Nasdaq composite index dropped 35.84, or 2.22 percent, to 1,580.90. The Russell 2000 index of smaller companies fell 10.81, or 2.19 percent, to 482.29. The Treasury bond market was closed Tuesday for Veterans Day.
The credit markets have eased a bit since Lehman Brothers Holdings Inc.'s bankruptcy in mid-September, but they remain tight. Investors are impatient to see positive developments, in the real economy, not just in market borrowing rates, from the massive government interventions over the past two months, said Alan Gayle, senior investment strategist and director of asset allocation for RidgeWorth Capital Management. "The market is wondering," Gayle said, "how far does the line go out the door for government assistance?" AIG got more bailout money Monday, and later that day, American Express Co. got approval from the government to become a commercial bank. The credit card lender will now be able to accept deposits and access the government financing other banks have been using. American Express fell $1.58, or 6.6 percent, to $22.40. Starbucks shares fell 21 cents, or 2 percent, to $9.99 after the coffee retailer released its earnings, while Toll Brothers slipped 2 cents to $18.93. GM shares fell 44 cents, or 13 percent, to $2.92, while Ford Motor Co. fell 13 cents, or 6.7 percent, to $1.80. "It's just not pretty," said Ken Mayland, president of research firm ClearView Economics. "When the alternatives are either socializing GM or having it go through a very painful bankruptcy, neither of those are happy outcomes." Corporate bankruptcies have been piling up: soon after Circuit City Stores Inc. filed for Chapter 11 protection Monday, the Yellowstone Club, a mountain retreat for the wealthy, did the same, after failing to secure new financing. Third-quarter earnings declines from Vodafone Group PLC, the world's biggest mobile phone company by sales, and InterContinental Hotels Group PLC, the owner of the Holiday Inn hotel chain, revealed sharp pullbacks in consumer spending. And another round of job cuts were announced Tuesday from companies including Altria Group and Swedish vehicle maker Volvo AB; when companies slash jobs, consumer spending tends to fall further. It's possible the market is in the process of bottoming out after October's massive losses, but analysts say it will likely keep trading erratically until it starts to see promising signs that Americans are in healthier financial shape. That could happen, perhaps, if enough homeowners get help with their mortgages. Citigroup became the latest major bank, after similar actions by JPMorgan Chase & Co. and Bank of America Corp., to announce that it will try to keep borrowers at risk of foreclosure in their homes. Citigroup fell 41 cents, or 3.7 percent, to $10.80. Americans are also getting a bit of a break from tumbling fuel prices. Crude sank to a 20-month low as optimism waned that a huge economic stimulus plan in China will avert a prolonged slowdown in the global economy. Light, sweet crude for December delivery fell $3.08 to $59.33 a barrel on the New York Mercantile Exchange. At the pump, gasoline prices are at a national average of $2.22 a gallon. The dollar moved mostly higher against other major currencies Tuesday, while gold prices dipped. Declining issues outnumbered advancers by nearly 5 to 1 on the New York Stock Exchange, where consolidated volume came to 4.93 billion shares, up from 4.45 billion shares Monday. Overseas, Japan's Nikkei fell 3 percent and Hong Kong's Hang Seng fell 4.77 percent. In European trading, Britian's FTSE 100 lost 3.57 percent, Germany's DAX gave up 5.25 percent, and France's CAC-40 decreased 4.83 percent. |
