MARKET SNAPSHOT: U.S. Stocks Slide To 11-year Lows As Hopes For Auto Bailout Fade
Thursday November 20th, 2008 / 23h07
By Nick Godt U.S. stocks nose-dived into the close Thursday, with the S&P 500 index ending at its lowest level in more than 11 years, after it appeared unlikely Congress would quickly approve emergency loans for ailing automakers. Senate leaders said Congress would convene again the week of Dec. 8 if the automakers could come up with a new plan. "The market was looking to see this thing resolved by tomorrow," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "The fact that it won't be addressed until Dec. 8 isn't helping given the fact that economic conditions are so poor here." "It appears everything is in chaos," Mendelsohn said. "It's getting ugly." The Dow Jones Industrial Average (DJI) fell 444 points, or 5.6%, to end at 7,552, collapsing below a low it had made on Oct. 10 to close at a fresh five-and-a-half year low. General Motors (GM) maintained a 3% gain to close at $2.88. It earlier rallied to 4% amid hopes for a bailout. The stock had plunged more than 20% in morning trade. With concerns about a possible bankruptcy continuing to hit the stock of the auto giant, GM's financing unit GMAC applied to become a bank holding company to access emergency cash from the government. Ford Motor (F) shares rose 10%. Citigroup Inc. (C) plunged more than 26% even after Saudi investor Prince Alaweed said he would raise his stake in the bank to 5%. The S&P 500 index (SPX) fell 54 points to 752, after crashing through its 2002 bear market low to close at its lowest level in more than 11 years. The broad S&P 500 index, the market benchmark most followed by professional investors, has now lost nearly 52% since its record high close of Oct. 9, 2007. "The sick joke, that was not true for the 2000-02 bear market, is that we can now say we have seen the worse of it," said Howard Silverblatt, index analyst at Standard & Poor's. "We can only lose 48.07% more." The Nasdaq Composite (RIXF) fell 70 points to end at 1,316. Trading volumes showed 2.2 billion shares exchanging hands on the New York Stock Exchange and 1.4 billion shares trading on the Nasdaq stock market. Decliners outpaced gainers by a margin of 15 to 1 on the NYSE and of 6 to 1 on Nasdaq. Economic concerns drove a barrel of crude oil to slump below $50 for the first time in more than three years. But the move, seen more as a sign of how bad the economic outlook has become than as a positive for consumers, failed to provide much relief to the market. The energy sector remained the worst performer on the S&P, sliding more than 15%, followed by telecoms, which fell more than 9%, and financials, off 10%. Underlying concerns about the battered financial sector continued to weigh on the market after Treasury Secretary Henry Paulson said the outgoing administration won't use some of the $700 billion from the Troubled Assets Relief Program to buy debt securities. On Wednesday, stocks were also crushed, with credit market-led fears and Citigroup's $17 billion balance sheet addition punishing markets. The Dow Jones Industrial Average dropped 427 points, the S&P 500 lost 52 points and the Nasdaq Composite fell 96 points. Overseas, the Swiss National Bank made a surprise and steep one percentage point rate cut Thursday. Still, markets were lower on the session. Major earnings will come after the close when Dell (DELL), Limited Brands (LTD) and the Gap (GPS) report results. Grand Canyon Education (LOPE) priced its initial public offering at $12, the low end of a twice-lowered range as it ended the longest IPO drought in a decade. Overseas, the pan-European Dow Jones Stoxx 600 lost more than 4%, while the Nikkei 225 fell nearly 7% in Tokyo. Job cuts between 1,400 and 2,700 each were announced by AstraZeneca (AZN), Rolls-Royce, Sandvik and PSA Peugeot Citroen.
