WORLD> America
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WORLD> America
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Wall Street lower on earnings news
(Agencies)
Updated: 2008-10-22 09:00 Falling confidence in the corporate sector sent stocks lower on Tuesday as investors digested a discouraging batch of earnings reports and a new initiative from the Federal Reserve to shore up money-market mutual funds.
The Dow Jones industrial average fell 231.77 points, or 2.5 percent, to 9,033.66 after Caterpillar and DuPont, two members of the blue-chip index, said their earnings declined in the third quarter and suggested a bleak outlook for the economy. Caterpillar, a top maker of earthmoving equipment, called the current situation "the worst in years." Policy makers and economists have warned that the economy is in for a rough ride over the next few months as the credit crisis hurts businesses and consumer demand. The job market is expected to weaken further and the housing slump has shown no evidence of letting up. In the credit markets, however, signs of improvement continued to appear. Borrowing rates between banks dropped again, a crucial show of confidence among financial institutions. The benchmark rate for overnight interbank loans, known as Libor, dropped to its lowest level in more than a month, a significant improvement from just a few days ago when it neared record highs. But stock investors seemed more focused on the corporate sector, including a report that the billionaire investor Kirk Kerkorian had started to sell his stake in Ford. Mr. Kerkorian said his investment company, Tracinda, sold 7.3 million shares of Ford stock on Monday at a huge loss and intended to further reduce its remaining 6.1 percent stake. The move underscored the weakening state of Ford and its two Detroit rivals, General Motors and Chrysler, which are in merger talks. The broader Standard & Poor's 500-stock index lost 30.35 points, or 3.1 percent, to 955.05, and the Nasdaq composite dropped 73.35 points, or 4.1 percent, to 1,696.68. Technology stocks led the declines, a day after Texas Instruments said sales would fall short of expectations. Texas Instruments shares declined 6.3 percent. Shares of Ford fell 6.9 percent. Caterpillar dropped 5 percent and DuPont was off by 8 percent. Investors may also have sold shares to lock in gains from Monday's 413-point rally in the Dow. European stocks ended mixed, turning mostly lower in the afternoon a day after France announced a big injection of cash into French banks. Under the plan announced late Monday by the French finance minister, Christine Lagarde, the government will buy 10.5 billion euros, or about $14 billion, of subordinated debt from six major lenders in exchange for a pledge that they will increase lending to businesses and consumers. Shares in London and Frankfurt fell more than 1 percent. In Paris, stocks rose 0.8 percent. Oil prices fell $3.36 to settle at $70.89 a barrel in New York trading. Interest rates were lower. The Treasury's benchmark 10-year bill was up 27/32, at 102 4/32, and the yield, which moves in the opposite direction from the price, was at 3.74 percent, down from 3.84 percent late Monday. |
