Dow off 224 as economic fear grows

By Charley Blaine and Elizabeth Strott

Stocks fell back again today -- with the losses accelerating in the last hour of trading -- as bank, brokerage and insurance stocks dragged the market lower.

The Dow Jones industrials fell 224 points, or 2.6%, to 8,274. The Standard & Poor's 500 Index was off 23 points, or 2.6%, to 851, and the Nasdaq Composite Index was down 35 points, or 2.3%, to 1,482.

The losses were the seventh in the last 10 session for the major indexes. The Dow is off 11% this month; the Nasdaq is off nearly 13.6%. The market's performance repeated its dreary pattern of selling off heavily late in the day.

"Fear wins today," Ernie Ankrim, chief investment strategist at Russell Investments, told Bloomberg Television.

One strong signal of fear: The yield of the 13-week Treasury bill fell to 0.09% down from 0.13% on Friday.

Futures trading suggests U.S. stocks may open slightly lower on Tuesday. Stocks in Japan, China, Hong Kong, Australia and New Zealand were all lower in early trading.

Yahoo (YHOO, news, msgs) shares may rise after CEO Jerry Yang stepped down as CEO late Monday. He failed to negotiate a takeover by Microsoft (MSFT, news, msgs) and broker an online advertising agreement with Google (GOOG, news, msgs). (Microsoft is the publisher of MSN Money.)

Yahoo is searching for a new CEO, a company statement said. Yang, 40, will continue as a director. He took Yahoo's top job in June 2007, promising to win back users and advertisers lost to Google. But the company still struggled.

Yahoo shares were up 4.4% to $11.10 in after-hours trading today after falling 1.8% in regular trading.

While Yahoo's shares jumped nearly 60% after Microsoft offered to buy the company in January, they collapsed as the year wore on and are now down 54% for the year and not much above their 2001 lows.

Financial stocks pull market lower

Yahoo's decline on Monday was part of a general decline in tech shares.

The bigger problem, however, was weakness among the biggest banks after Citigroup (C, news, msgs) said it was cutting more than 50,000 jobs in the next year. Citigroup was off 6.6% to $8.89. JPMorgan Chase (JPM, news, msgs) was off 4.9% to $32.77, and Bank of America (BAC, news, msgs) was off 8.5% to $15.03.

Insurance stocks tumbled as well on worries that deteriorating investment portfolios and rising losses will force companies to raise new capital.

The KBW Insurance Index ($KIX) was off 7.1% to 67.16, the worst performance of the 42 indexes that Market Dispatches tracks. Hartford Financial Services (HIG, news, msgs), which jumped 21% on Friday after it said it would convert its charter to a savings & loan, gave all of that gain back today, falling 26.8% to $9.26. MetLife (MET, news, msgs) was off 21% to $22.23. Lincoln National (LNC, news, msgs) was down 12.5% to $12.55.

Also hitting the market was weakness in technology stocks because of worries that business will cut back on tech spending and slumping consumer spending. Microsoft was down 3.7% to $19.32, a 10-year low. Dell (DELL, news, msgs) was down 3.4% to $10.52. Apple (AAPL, news, msgs) was off 2.3% to $88.14. (Microsoft is the publisher of MSN Money.)

Crude oil closed down 3.7% to $54.95 today, and energy stocks were lower as a result. Chevron (CVX, news, msgs) was down 2.6% to $70.78. Anadarko Petroleum (APC, news, msgs) was off 0.4% to $37.68.

Walt Disney (DIS, news, msgs) was leading media and entertainment stocks lower because of weakness in advertising markets and worries about how badly the recession will hit its theme-park business. Disney was off 6.4% to $19.74. News Corp. (NWS, news, msgs) was down 6.5% to $7.07.

Soleil analyst Laura Martin downgraded Disney to "hold" from "buy."

Only three of the Dow stocks were higher today: General Motors (GM, news, msgs), up 5.7% to $3.18; General Electric (GE, news, msgs), up 0.6% to $16.11; and Boeing (BA, news, msgs), up 0.3% to $41.18.

Meanwhile, only 69 S&P 500 stocks were higher, led by GM, and 18 stocks in the Nasdaq-100 Index ($NDX.X).

Energy prices -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$54.95	$57.04	-$2.09	-18.96%	-42.75%
Heating oil (per gallon)	$1.7910	$1.8318	-$0.0408	-10.73%	-32.40%
Natural gas (per million BTU)	$6.5330	$6.3120	$0.2210	-3.69%	-12.70%
Unleaded gasoline (per gallon)	$1.1746	$1.2391	-$0.0645	-18.50%	-52.84%

The big cuts coming at Citigroup

Citigroup CEO Vikram Pandit announced the company's big job cuts at a town hall meeting this morning. The company will cut expenses by 20% to about $50 billion next year, he said.

Citigroup has lost more than $20 billion in the past four quarters.

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Meanwhile, Britain's Sunday Telegraph reported that JPMorgan Chase will slash thousands of jobs as well. The paper said JPMorgan's cuts will be comparable to rivals' moves.

Citi and Goldman Sachs (GS, news, msgs) have already cut about 10% of their work forces.

Goldman execs give up bonuses

Top executives at Goldman Sachs will not be taking home bonuses this year.

Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar, co-presidents Jon Winkelreid and Gary Cohn and vice chairmen J. Michael Evans, Michael Sherwood and John S. Weinberg asked the company's board to forgo giving them their year-end bonuses because of the crumbling economy.

In 2007, Blankfein took home a bonus of $68.5 million in cash and stock.

Goldman stock fell 6.4% to $62.49. Shares have slumped 71% this year.

Target profit falls

Target (TGT, news, msgs) posted a 24% drop in profit, as consumers held onto their wallets amid the financial crisis. It was the company's fifth straight quarter of declining profit.

• Read more: 5 reasons you're shopping at Wal-Mart now

Target earned $369 million, or 49 cents per share, down from the $483 million, or 56 cents per share, it earned in the same quarter a year ago. The results topped Wall Street's estimate by a penny.

Target also said it is temporarily suspending all of its stock buybacks and announced that it will cut its capital spending plan in 2009 by $1 billion.

"The current environment and our financial outlook have naturally reduced our appetite for investment in our business, and we have also temporarily suspended substantially all of our share repurchase activity," Chief Financial Officer Doug Scovanner said in a statement.

Shares of Target were down 4.1% to $31.68.

Japan falls into recession

Japan's economy has officially fallen into recession territory, according to the latest data.

Japan's Cabinet Office said that the economy shrank by 0.1% in the third quarter, following a 0.9% decline in the second quarter. Two consecutive quarters of economic contraction is the technical definition of a recession. Japan's economy is the second-biggest in the world, following the U.S. economy.

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In Asia, stocks were mixed. Japan's Nikkei 225 Index closed up 0.7% and the Hong Kong Hang Seng Index shed 0.1%, but the MSCI Asia Pacific Index managed to gain 0.7%.

In Europe, stocks were lower. London's FTSE 100 Index lost 2.4% to 4,132, the German DAX 30 Index was down 3.3%to 4,557, and the broader DJStoxx 600 Index was down 2.6%.

More economic weakness

For better or worse, investors will gain visibility into the strength of the economy this week, with the release of a number of important reports.

A reading on the manufacturing industry in the New York region showed continued weakness. The New York Empire State manufacturing index fell to a record low of negative 25.4 in November from a reading of negative 24.6 in October. The reading was slightly better than the negative 26 economists had expected.

Negative readings indicate contraction.

A survey by the National Association for Business Economics said economists expect a recession in the U.S. to last through 2009.

"Business economists became decidedly more negative on the economic outlook for the next several quarters as a result of the intensification of credit-market stresses," said Chris Varvares, president of the association.

The NABE survey offered dismal forecasts for auto sales, consumer spending and the housing market. A mere 40% of the economists polled believe the Treasury Department's financial rescue plan will help boost growth, while 48% of respondents said the housing market would not bottom before the middle of next year.

Investors can gauge inflation with the Producer Price Index and the Consumer Price Index, which come out Tuesday and Wednesday mornings, before the start of trading.

The PPI is expected to decline by 1.5% in October after falling 0.4% in September, and the CPI is expected to fall 0.8% in October following a flat reading in September.

Inflation had been a major concern for the government before the economic crisis sapped demand in summer and early fall.

Housing still a mess

On Wednesday, investors will get fresh data on the housing market. Housing starts are expected to have fallen to a seasonally adjusted annual rate of 776,000 in October after slumping to a rate of 817,000 units in September.

"History and the natural rate of household formation would suggest that we are near the bottom of a two-year slide, but the outstanding stock of new homes and the overall health of the economy point to even further declines ahead," CIBC World Markets economist Meny Grauman wrote in a note to clients.

Housing starts are down 65% from a peak annual rate of about 2.2 million units in late 2005 and early 2006. Home-building shares were down today. Ryland (RYL, news, msgs) was 4.6% to $13.76. Pulte Homes (PHM, news, msgs) was down 2% to $8.90.

The weakness in housing hit results for home-improvement retailer Lowe's (LOW, news, msgs). Lowe's said it earned $488 million, or 33 cents per share in its fiscal-third quarter, a 24% decline from $643 million, or 44 cents per share, a year ago.

Still, the results were better than analysts' expectations of 28 cents per share, and the stock jumped 4.2% to $18.99. The percentage was gain was second among S&P 500 stocks after General Motors.

Lowe's said it expects fourth-quarter profit to be between 8 cents and 16 cents per share; the consensus estimate is for 18 cents per share for the current quarter.

The stock was up 4.2% to $19.99, second-best among S&P 500 stocks. Rival Home Depot (HD, news, msgs), a Dow component, reports on Tuesday. The stock was down 2.6% to $20 today.

Andrew Rosenbaum contributed to this report.

Short hits from the markets -- New York close

	Mon.	Fri.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	0.090%	0.130%	-0.040	-79.31%	-97.13%
5-year Treasury note yield	2.305%	2.347%	-0.042	-18.29%	-33.29%
10-year Treasury note yield	3.684%	3.750%	-0.066	-7.20%	-8.70%
30-year Treasury bond yield	4.206%	4.230%	-0.024	-3.73%	-5.67%
Currencies
U.S. Dollar Index	87.140	86.785	0.355	0.92%	13.62%
British pound in dollars	$1.4990	$1.4667	0.0323	-6.82%	-24.64%
Dollar in British pounds	£0.6671	£0.6818	-0.0147	7.32%	32.70%
Euro in dollars	$1.2650	$1.2539	0.0111	-0.77%	-13.45%
Dollar in euros	€ 0.7905	€ 0.7975	-0.0070	0.78%	15.54%
Dollar in yen	96.34	96.25	0.09	-2.31%	-13.87%
Canadian dollar in U.S. dollars	$0.815	$0.808	$0.0069	-1.48%	-17.90%
U.S. dollar in Canadian dollars	$1.228	$1.237	-$0.0096	1.52%	21.81%
Commodities
Gold	$742.00	$742.50	-$0.50	3.31%	-11.46%
Copper	$1.6670	$1.7150	-$0.05	-8.86%	-45.18%
Silver	$9.3300	$9.4900	-$0.16	-4.11%	-37.47%
Corn	$3.8575	$3.8025	$0.05	-3.92%	-15.31%
Crude oil (NYMEX) (per barrel)	$54.95	$57.04	-$2.09	-18.96%	-42.75%