Dow falls 211 as late selling batters stocks

If investors had something to be thankful for after today's drubbing of the stock market, it was that the day ended.

The Dow Jones industrials fell more than 211 points, below its August closing low, and the Standard & Poor's 500 Index saw its 2007 gains wiped out.

The stock market will be closed Thursday for Thanksgiving and will be open only until 1 p.m. ET on Friday.

Stocks fell on credit worries, on concerns that resolving the nation's subprime-mortgage crisis is going to take longer than anyone thinks and on worries that the combination of the housing slump and high oil prices will damage the holiday shopping season and the economy into 2008.

The wariness remained in place all day, although crude oil failed to top $100 a barrel in New York trading.

The selling was a huge disappointment to bulls who had hoped that the market's abrupt recovery from lows on Tuesday meant the market was making a bottom from the sell-off that began in October.

And there was even some grousing against the Federal Reserve's downbeat forecast for the next year, released on Tuesday. When investors are nervous, Al Goldman, chief market strategist at A.G. Edwards told The Wall Street Journal, they don't "need the Fed to come out and say economic growth the next couple of years is going to be rather modest."

The Dow's 211-point loss, or 1.6%, to 12,799.04, brought the blue-chip index under 12,845.78, its Aug. 16 close during the worst of the global credit seize-up. Many analysts had seen this level as an important support level for the index. While the Dow has lost 1,131 points, or 8.1%, since Oct. 31, it is still up 2.7% on the year.

The S&P 500 fell 23 points, or 1.6%, to about 1,416.62. That's nearly 2 points under its Dec. 31, 2006, close of 1,418.30 and 9.5% below its all-time closing high of 1,565.15 on Oct. 9.

The Nasdaq Composite Index, meanwhile, was down nearly 35 points, or 1.3%, to 2,562.15. While it is still up 6% on the year, it has fallen 10.4% from 2,859.12, its closing high on Oct. 31.

Crude oil, which closed at $98.03 a barrel on Tuesday, briefly tried a run at $100, hitting $99.29 a barrel in overnight trading. But it closed at $97.29, down 74 cents Tuesday, after a government report showed a smaller-than-expected decline in domestic inventories.

"People are buying and selling off the headlines. The market is so emotional," Neil Hennessy, president and portfolio manager of Hennessy Funds, told The Associated Press. "You look at oil approaching $100. People are taking their money and going to the sidelines."

While stocks were tumbling, there was a big move into Treasury securities as investors sought safety. As a result, interest rates fell. The yield on the 10-year Treasury note fell to 4.024% from 4.05% on Tuesday. The yield briefly fell to 3.98%, the first time the 10-year yield has been under 4% since September 2005.

The 3-year Treasury note yield to 2.9%.

Credit Treasury Secretary Henry Paulson for much of today's early selling. He told The Wall Street Journal that he wants the mortgage industry to help the millions of homeowners who are struggling with delinquencies and defaults.

Paulson's comments were a shift from his previous stance that the mortgage-related problems should be reviewed on a case-by-case basis. "I've talked to enough people now to know there's no way that's going to work," Paulson told The Journal.

There's fear that the market turmoil this November -- the stock market's worst month so far this year -- will dampen holiday shopping spirits as retailers gear up for "Black Friday."

Black Friday, so called because it's the day traditionally that retailers go from being "in the red" to in the black, is the ceremonial kickoff to the shopping season.

Energy prices -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$97.29	$98.03	-$0.74	2.92%	59.36%
Heating oil (per gallon)	$2.6874	$2.6901	-$0.0027	7.16%	68.18%
Natural gas (per million BTU)	$7.5500	$7.4770	$0.0730	-9.36%	19.86%
Unleaded gasoline (per gallon)	$2.4371	$2.4515	-$0.0144	4.15%	52.12%

GM is the sole Dow winner

General Motors (GM, news, msgs) gave the Dow a little excitement in the afternoon. The stock jumped as much as 3% after its 49%-owned GMAC Financial Services said it has hired advisers to explore options for its Residential Capital mortgage business, which has been stung recently by massive losses.

GM sold a majority interest in GMAC to Cerberus Capital last year.

GM finished with a 0.4% gain to $26.39 and was the only one of the 30 Dow stocks to show a gain on the day.

Only 66 S&P 500 stocks finished in the black, led by E*Trade Financial (ETFC, news, msgs), up 12.1% to $4.26, and farm equipment maker Deere (DE, news, msgs), up 4.9% to $152.06.

Twenty-five of the 100 Nasdaq-100 ($NDX.X) stocks showed gains. Google (GOOG, news, msgs) was up 1.9% to $660.52, adding 2 points to the index, which was down 24 points to 2,006.38.

But a lot of big techs were losers on the day. Microsoft (MSFT, news, msgs) was down 1% to $34.23. Intel (INTC, news, msgs) fell 3.5% to $24.63, and Cisco Systems (CSCO, news, msgs) was off 2.7% to $28.26. (Microsoft is the publisher of MSN Money.)

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The weak links of the day were the laggards for the year: financial stocks and home builders. Pulte Homes (PHM, news, msgs) was down 12.7% to $9.25. Countrywide Financial (CFC, news, msgs) was off 8.4% to $9.42, as speculation continued to build about whether the company can survive its subprime troubles.

American International Group (AIG, news, msgs) was the worst performer among the Dow stocks down 5.7% to $51.33. In addition, energy, materials and health care stocks were lower.

The other financial stocks in the Dow were lower as well: Citigroup (C, news, msgs) fell 2.1% to $30.73, its worst close since October 2002.

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Crude oil falls

Crude oil was falling near the close despite a government report that showed a decline in supplies: Crude stocks fell by 1.1 million barrels last week to a level of 313.6 million barrels; analysts were looking for an increase of 800,000 barrels.

Crude fell because inventories at Cushing, Okla., where New York-traded West Texas Intermediate oil is stored, rose 1.14 million barrels to 14.6 million last week.

Nationwide, inventories of crude oil fell by 1.07 million barrels to 313.6 million, the report showed. The market's reaction to the oil report suggests "that the market is tired and a rally has run its course," Kyle Cooper, director of research at IAF Advisors in Houston, told Bloomberg News.

The slumping value of the U.S. dollar is contributing to rising oil prices because the dollar is used to price oil around the world. The dollar was little changed against the euro, British pound, yen and Canadian dollar.

For the year, however, the dollar is down 5.2% against the pound, 11% against the euro, 8.9% against the yen and 15.3% against the Canadian dollar.

The U.S. Dollar Index, which measures the dollar against a market basket of currencies, was down slightly at 75.015 from 75.06 Tuesday. It's down 10% this year.

• Video: How to profit from the falling dollar

Oil has jumped more than 60% since the beginning of the year.

According to today's inventory report, supplies of distillates, used to make heating oil, fell by 2.4 million barrels, and gasoline supplies rose by 200,000 barrels. Analysts were looking for a drop of 400,000 in distillate supplies and a gain of 700,000 in gas stocks.

Consumer confidence falls

Rising energy prices and a falling dollar seem to be taking an emotional toll on consumers.

The Reuters/University of Michigan consumer confidence index fell to a reading of 76.1 in November, down from a reading of 80.9 in October -- and the lowest level since October 2005.

• Talk back: How much do you spend on the holidays?

"Rising prices for fuel and food had a devastating impact on household budgets, and falling home prices have diminished consumers' sense of financial security," survey director Richard Curtin said in the press release.

Curtin predicted that consumer spending growth "will nearly come to a halt in the closing months of 2007."

Energy prices will hurt consumer spending, Lindsey Piegza, an analyst at FTN Financial, told Bloomberg News. "I don't expect a collapse in spending, but it will be very weak for the holidays."

Circuit City downgraded

The holiday season is upon us, but Circuit City (CC, news, msgs) may be a bit short on seasonal cheer after today. The electronics retailer was downgraded to "neutral" from "overweight" by JPMorgan Chase (JPM, news, msgs).

Circuit City faces increased competition from Best Buy (BBY, news, msgs) and discount retailer Wal-Mart Stores (WMT, news, msgs), analyst Stephen Chick wrote in a note to clients.

In addition, Circuit City is still troubled by problems left over from past management decisions, and a turnaround would likely include a strategic partner or some sort of acquisition, Chick wrote.

Shares of Circuit City fell 5.5% to $5.45.

Limited Brands hit by warm weather

Who knew that warm weather was bad news for lingerie?

Limited Brands (LTD, news, msgs), which operates Victoria's Secret stores, said late Tuesday that balmy weather had hurt both sales and profit in the third quarter.

Limited reported earnings of $12.1 million, or 3 cents per share -- a 48% drop from the $23.5 million, or 6 cents per share, it earned in the same period a year ago.

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Excluding a tax benefit, the company reported a loss of a penny per share, below the consensus estimate of a 1-cent-per-share profit.

Sales fell 10% to $1.9 billion; Limited Brands still owned Limited and Express stores in the third quarter of last year.

Shares of Limited Brands were up 2.6% to $17.99 this afternoon.

Limited Brands also forecast a grim fourth quarter: The company expects a drop in sales in the mid-single digits at stores open at least one year, worse than a previous forecast of flat same-store sales. The lowered guidance relates "to the opening of a new distribution center for Victoria's Secret Direct and the challenging overall retail environment."

Limited isn't the only retailer to be hit by weak sales and worries about the economy. JC Penney (JCP, news, msgs), Target (TGT, news, msgs) and Starbucks (SBUX, news, msgs) have all given disappointing results or forecasts, and the National Retail Federation expects sales in November and December to rise only 4% to $474.5 billion -- below the 10-year average of a 4.8% increase.

International demand boosts Deere

Want some good news from the market? Thank farm-equipment giant Deere, whose shares jumped 4.9% this afternoon to $152.06 after reporting a 52% jump in fiscal-fourth-quarter profit this morning. The reason: strong international business.

Deere said earnings were $422 million, or $1.88 per share, a jump from $277 million, or $1.20 per share, in the same quarter a year ago, and topping analysts' estimates of 1.54 per share.

Sales rose 20% to $6.14 billion, helped by strong demand for farm equipment in Brazil and other South American countries, where farmers are growing more products to keep up with demand for biofuels and ethanol.

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Deere forecast fiscal-first-quarter sales growth of 25%. Deere's outlook was far different from that of rival Caterpillar (CAT, news, msgs), which warned last month that the North American economy would drag down profit in coming quarters. Caterpillar said that some of its businesses are in recession because of the credit crunch and slumping housing market.

Shares of Caterpillar, a Dow component, were down 0.5% to $67.94.

Short hits from the markets -- 4 p.m. ET

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	3.040%	3.160%	-0.120	-20.42%	-37.77%
5-year Treasury note yield	3.366%	3.495%	-0.129	-19.22%	-28.40%
10-year Treasury note yield	4.024%	4.054%	-0.030	-10.08%	-14.56%
30-year Treasury bond yield	4.467%	4.484%	-0.017	-5.98%	-7.29%
Currencies
U.S. Dollar Index	75.02	75.06	-0.04	-1.94%	-10.04%
British pound in U.S. dollars	$2.0644	$2.0683	-0.0038	-0.78%	5.35%
U.S. dollar in British pounds	£0.4844	£0.4835	0.0009	0.79%	-5.08%
Euro in U.S. dollars	1.4854	1.4848	0.0007	2.61%	12.54%
U.S. dollar in euros	€ 0.6732	€ 0.6735	-0.0003	-2.55%	-11.14%
U.S. dollar in yen	¥108.56	¥109.90	-1.34	-5.94%	-8.79%
U.S. dollar in Canadian dollars	$0.99	$0.98	0.01	4.52%	-15.30%
Canadian dollar in U.S. dollars	$1.01	$1.02	-0.01	-4.30%	18.12%
Commodities
Gold	$798.60	$791.40	$7.20	0.41%	25.17%
Copper	$2.8880	$3.0270	-$0.139	-16.84%	0.59%
Silver	$14.4200	$14.4200	-$0.08	-0.12%	12.10%
Crude oil (NYMEX) (per barrel)	$97.29	$98.03	-$0.74	2.92%	59.36%

Whole Foods profit falls, but sales jump

Natural-grocery chain Whole Foods Market (WFMI, news, msgs) reported late Tuesday that fiscal-fourth-quarter earnings were $33.9 million, or 24 cents per share, a 15% decline from earnings of $39.8 million, or 28 cents per share, in the same quarter last year.

The profit decline was due to legal fees related to Whole Foods' acquisition of Wild Oats. Analysts were looking for earnings of 30 cents per share.

Revenue jumped 35% to $1.74 billion from $1.29 billion last year, thanks in part to a gain from the Wild Oats deal; excluding Wild Oats stores, sales rose 16% to $1.6 billion.

Whole Foods forecast sales to grow between 25% and 30% in fiscal 2008, ahead of the consensus estimate of 23% growth.

Shares dropped 1.9% to $41.43 this afternoon.

Separately, Whole Foods said it is boosting its quarterly dividend by 11%, to 20 cents per share.

By Charley Blaine and Elizabeth Strott