By Nick Godt
U.S. stocks finished well into negative territory Thursday, with Dow industrials losing nearly 200 points, amid uncertainty about a bailout of the ailing auto sector and renewed concerns about the health of financial firms.
Late Wednesday, the U.S. House of Representatives approved a $14 billion federal loan package to the Big Three automakers in a 237-170 vote. But Senate Republicans were mulling alternatives, saying they couldn't support the bill in its current form.
"That the auto bailout is not going to go through, or at least not in its current form, is discouraging people a little bit today," said Ken Tower, market strategist at Quantitative Analysis Services.
Financial firms, which have been the recipient of massive government aid, "are still in a downward spiral," he said, noting that financials were the weakest sector in the market Thursday.
The Dow Jones Industrial Average (DJI) finished down 196 points, or 2.2%, at 8,565, well off an earlier high of 8,809.
General Motors Corp. (GM) weighed on the Dow, slumping more than 10%. Ford Motor Co. (F) shares fell nearly 11%.
Financial blue chips were also under pressure, with J.P. Morgan Chase (JPM) off 10.7%. Chief Executive Jamie Dimon told CNBC that the integration of brokerage firm Bear Stearns has been harder than expected because of market turmoil.
Shares of Citigroup (C) fell nearly 9% and Bank of America (BAC) lost more 10%.
Also on the Dow, household products giant Procter & Gamble lowered its sales growth forecasts for the current quarter. The company, however, said it still expects to meet its previous earnings forecasts and its shares lost less than 1%.
The energy sector provided a pocket of strength earlier as crude-oil futures jumped more than 10%, extending a rally from the previous session, as the dollar weakened and on expectation of steep production cuts.
While some firms such as Hess Corp. (HES) and Chevron Corp. (CVX) posted gains, others such as Exxon Mobil Corp. (XOM) fell back.
The S&P 500 index (SPX) lost 25 points, or 2.85%, to 873, while the Nasdaq Composite (RIXF) fell 57 points, or 3.7%, to 1,507.
By sector on the S&P, financials fell the most, down 8%, followed by consumer discretionary, down 5%, and industrials, off nearly 5%.
Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange and 812 million trading on the Nasdaq stock market. Declining issues topped gainers by 3 to 1 on both the NYSE and on Nasdaq.
The telecommunication sector was also under pressure, down more than 4%. Shares of Sprint Nextel Corp. (US-S) slumped 14% after Moody's Investors Service cut the company's unsecured debt to "junk" status. The downgrade comes as the telecom carrier's market position has weakened significantly and as Sprint Nextel continues to seek a turnaround in its wireless operations, the debt-rating agency said.
Also on the telecom front, the $41 billion leveraged buyout of Canadian carrier BCE Inc. (BCE) ended after auditors KPMG concluded the company that would have emerged from the deal wouldn't be solvent.
Separately, discount retailer Costco Wholesale Corp. (COST) fell 3% after reporting on Thursday that fiscal first-quarter net income was about flat, reflecting bargain-hunting shoppers looking for deals in a downbeat economy. Same-store sales edged up 1% and total sales rose 3.6%.
More economic gloom
Stocks first came under pressure after the Labor Department reported that initial unemployment claims jumped to a 26-year high last week.
First-time filings for state unemployment benefits jumped by 58,000 to a total of 573,000. The number of people collecting unemployment benefits rose by 338,000 to 4.43 million, also the highest since late 1982, the Labor Department said. The 338,000 increase in the week ended Nov. 29 was the most since 1974.
Separate reports showed that import prices fell and the U.S. trade deficit unexpectedly increased.
The dollar came under heavy selling pressure, falling 1.3% against a basket of six major counterparts in recent action. Besides the weak U.S. reports, the dollar came under pressure against a sharply higher euro following comments from European Central Bank member Axel Weber.
A weaker dollar tends to boost dollar-denominated commodities, such as crude oil and gold, as it makes them cheaper to buy for holders of other currencies. Besides oil's surge, gold rose more than $17.80 to end at $826.90 an ounce, but mining shares, such as Freeport McMoRan Copper & Gold, also finished lower.

Publié le 11 Décembre 2008 Copyright © 2008 Dowjones