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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.660027 |
| Euro to US Dollar | 1.498801 |
| Japanese Yen to US Dollar | 0.011305 |
| Canadian Dollar to US Dollar | 0.946074 |
Stocks slumped to their worst levels in more than five years today as fears about the deteriorating economy intensified.
The Dow Jones industrials closed down 427 points, or 5.1%, to 7,997, its first close below 8,000 since March 31, 2003.
The Standard & Poor 500 Index was down 53 points, or 6.1%, to 807, its worst close since March 12, 2003. In the process, the index fell below 819, its intraday low on Nov. 13 and a closely watched support level.
The Nasdaq Composite dropped 97 points, or 6.5%, to 1,386, its first close below 1,400 since April 16, 2003. The Nasdaq-100 Index ($NDX.X) fell 68 points, or 5.9%, to 1,088, its lowest close since April 25, 2003.
Futures trading suggests the market may open lower on Thursday. Asian stocks were sharply lower.
Today's selloff reflected three forces at work:
- A sharp decline in financial stocks. That was, in part, a show of investor unhappiness that the Treasury Department has junked its plan to take over the troubled assets of a number of financial institutions.
- Increasing worries that the recession will be much worse than anyone thought, with deflation problems growing. The Federal Reserve issued new projections today showing unemployment could jump well above 7% next year. Prior forecasts had seen jobless peaking at no more than 6%. The economy is "deteriorating faster than any time since the second quarter of 1980," former Fed governor Lyle Gramley told Bloomberg Television today. Indeed, the Fed pledged at its Oct. 28-29 meeting to take "whatever steps were necessary to support the recovery of the economy."
- Fears that inaction in Congress will lead to the collapse of General Motors (GM, news, msgs), Chrysler Group or both.
Citigroup (C, news, msgs) shares fell 23.4% to $6.40, its first close below $7 since May 1995. Bank of America (BAC, news, msgs) fell 14% to $13.06, and JPMorgan Chase (JPM, news, msgs) was down 11.4% to $28.47. The Select Sector SPDR-Financial (XLF, news, msgs) exchange-traded fund, which tracks the financial sector of the S&P 500, fell 10.5% to $10.52.
The Nasdaq and Nasdaq-100 were pulled lower by weakness in such key technology stocks as Microsoft (MSFT, news, msgs), down 6.8% to $18.29; Apple (AAPL, news, msgs), down 4% TO $86.29; and Cisco Systems (CSCO, news, msgs), down 8.3% to $15.08. (Microsoft is the publisher of MSN Money.)
Google (GOOG, news, msgs) was off 5.8% to $280.18, its lowest close since June 5, 2005. The stock is down 59.5% this year.
In addition, Yahoo (YHOO, news, msgs) was off 20.2% to $9.22, the worst loss among Nasdaq-100 stocks, after Microsoft CEO Steve Ballmer once again ruled out buying the company but expressed interest in resuming talks on a Web search partnership.
- Top Stocks blog: Yahoo shares plunge as Microsoft nixes buy
Adding to the glum mood was the Federal Reserve's new economic projections, which see unemployment in the United States jumping well above 7% in 2009.
Meanwhile, executives from GM, Ford Motor (F, news, msgs) and Chrysler finished making their case for more government aid to the House Financial Services Committee.
The prospects for actually getting help didn't look good.
"The problem is the real specter of what we do on the GM front," Art Hogan, chief market strategist at Jefferies, told CNNMoney. "It's really hanging over the market right now. It's the 400-pound gorilla."
Crude oil closed down 77 cents to $53.62 after a government report showed larger-than-expected domestic oil supplies. There was speculation that crude could fall below $50.
All 30 of the stocks in the Dow were lower on the day. Only seven S&P 500 stocks were higher, along with just one Nasdaq-100 stock: software maker CA Inc. (CA, news, msgs), up 0.2% to $15.30.
With today's losses, the Dow is down 39.7% for the year. The S&P 500 is down 45.1%, and the Nasdaq is off 47.7%. From highs in October 2007, the Dow has fallen 43.5%, with the S&P 500 off 48.5% and the Nasdaq off 52%.
Asian stocks fell overnight. Japan's Nikkei 225 Index fell 0.7%, Hong Kong's Hang Seng Index was down 0.8%, and the MSCI Asia Pacific Index lost 0.8%.
Stocks were down in Europe, as well. London's FTSE 100 Index was down 4.8%, and the broader DJ Stoxx 600 Index had shed 4%.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $53.62 | $54.39 | -$0.77 | -20.93% | -44.13% |
| Heating oil (per gallon) | $1.7597 | $1.7579 | $0.0018 | -12.29% | -33.58% |
| Natural gas (per million BTU) | $6.7430 | $6.5160 | $0.2270 | -0.59% | -9.89% |
| Unleaded gasoline (per gallon) | $1.1070 | $1.1368 | -$0.0298 | -23.19% | -55.56% |
Big Three continue to plead for help
The automakers want an additional $25 billion in aid from the government's $700 billion financial-rescue fund, and have said that loan would be enough to help them make it through 2009.In September, Congress approved a $25 billion loan to the automakers to help them convert to more fuel-efficient vehicles.
Shares of GM tumbled 9.7% to $2.79 today, a price not seen since 1942. Ford was down 25% to $1.26. Chrysler is privately held.
One analyst said GM might not make it to the end of the year without help. "Without fresh capital, we project that GM may not have sufficient liquidity to make it to year end," Deutsche Bank analyst Rod Lache wrote in a note to investors this morning.
Automotive analyst George Magliano of Global Insight told CNBC today that a collapse of Chrysler and GM would cost the economy 1.5 million jobs. He agreed with the auto companies that a bad situation this year was made worse in October when the government let investment house Lehman Bros. fail. That seized up credit markets and made getting a loan or auto lease much more difficult.
The Lehman decision means a "much deeper recession and much slower economy," he added.
- Read more: What if GM goes broke?
"What would it mean if the domestic industry were allowed to fail?" GM Chief Executive Officer Rick Wagoner argued in prepared testimony before both the Senate Banking Committee and the House Financial Services Committee.
"The societal costs would be catastrophic -- 3 million jobs lost within the first year, U.S. personal income reduced by $150 billion, and a government tax loss of more than $156 billion over three years.
- Top Stocks blog: How many jobs are tied to the Detroit 3?
"Such a level of economic devastation would far exceed the government support that our industry needs," Wagoner said. "This is about much more than just Detroit. It's about saving the U.S. economy from a catastrophic collapse."
GM even took out a full-page advertisement in today's Wall Street Journal that said that the automaker has taken steps to "position GM for long-term success." GM spent about $207,000 on the ad, according to CNBC.
Stock Charts (Year)
General Motors
Ford Motor
"Vehicles could cost anywhere from 5% to 15% more, maybe even more than that," Michael Robinet, vice president of global vehicle forecasts for auto consultant CSM Worldwide, told CNNMoney.com.
Yet the prospect of a bailout for the automakers looks pretty grim: Senate Finance Committee Chairman Christopher Dodd, D-Conn., said there is a remote chance at best that an aid bill will come out of the Senate.
"Their boardrooms, in my view, have been devoid of vision," Dodd said Tuesday. "They have promoted and often driven the demand of inefficient, gas-guzzling vehicles, and dismissed the threat of global warming."
Consumer prices, housing starts plunge
Consumer prices fell a record 1% in October, the Labor Department reported this morning -- the biggest year-over-year drop since 1947.Energy prices plunged 8.6%, also a record, in October. Gasoline prices fell 17% in October from September, according to the AAA.
Economists had expected a decline of 0.9% last month, following a flat reading in September.
Core prices, which exclude volatile food and energy prices, fell 0.1% last month, the first core CPI decline since 1982. Economists had expected the core Consumer Price Index to rise 0.1%.
On Tuesday, the Labor Department said producer prices plunged 2.8% in October, the biggest year-over-year decrease since 1947.
Meanwhile, new housing data provided more grim news. Housing starts fell 4.5% to a seasonally adjusted annual rate of 791,000 in October -- the slowest pace since the Commerce Department started tracking the data in the late 1940s.
Economists had actually expected an even worse decline to 776,000 after a 3% drop to a revised rate of 828,000 units in September.
More from MSN Money
Building permits fell 12% in October to an annual rate of 708,000, falling below a previous low of 709,000 in March of 1975.
The housing slump has been the source of many of the economic and financial problems that have plagued the markets in recent months.
On Tuesday, the National Association of Home Builders reported that builder sentiment has fallen to a record low.
Citigroup to wind down SIVs
Citigroup shares tumbled after the company announced it will acquire the remaining $17.4 billion in assets held by structured investment vehicles (SIVs) that the banking giant manages.The value of the funds has fallen from $21.5 billion as of Sept. 30.
SIVs are funds that borrow money by issuing short-term securities at a low interest rate, later lending the money through purchases of long-term securities at higher interest rates.
Citigroup invented the investment vehicles back in 1988 but suffered tremendously this year as the assets sank in value amid the credit crunch and mortgage-market meltdown.
The move is the latest by Citi to try to regain profitability after four quarters of losses and a huge drop in its stock price.
Boeing will delay deliveries
Aircraft maker Boeing (BA, news, msgs) is changing its production schedule to cope with the work stoppage caused by a recent 58-day strike by its machinists union. Boeing will add up to 10 weeks to the delivery dates for aircraft, The Wall Street Journal reported this morning.Boeing is not expected to discuss details until early next month.
Boeing shares fell 5.3% to $37.48.
Fannie Mae to be delisted from NYSE?
Fannie Mae (FNM, news, msgs) said late Tuesday that the New York Stock Exchange notified the government-backed mortgage company that it is deficient in listing standards and could be delisted.Fannie Mae shares have closed under $1 for more than 30 consecutive trading sessions through Nov. 12.
The company's stock fell 19.2% to 38 cents.
Fannie Mae has to tell the NYSE what it plans to do to remain compliant by Nov. 26.
GE to restructure financing arm
General Electric (GE, news, msgs) late Tuesday said it is reorganizing GE Capital, its financing division, to save $2 billion in costs next year. The restructuring will mean job cuts, but the company did not specify how many jobs will be lost.GE Capital has "evolved to the point where we think we are going to be smaller in 2009," the division's Chief Operating Officer Bill Cary said in a video on the company's Web site.
GE CEO Jeff Immelt has been taking steps to reduce the size of the conglomerate's finance businesses in the wake of the financial crisis.
Shares of GE dropped 10% to $14.45. GE shares are down 61% this year.
Andrew Rosenbaum contributed to this report.
| Wed. | Tues. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 0.065% | 0.110% | -0.045 | -85.06% | -97.93% |
| 5-year Treasury note yield | 2.091% | 2.195% | -0.104 | -25.88% | -39.48% |
| 10-year Treasury note yield | 3.391% | 3.535% | -0.144 | -14.58% | -15.96% |
| 30-year Treasury bond yield | 3.972% | 4.144% | -0.172 | -9.09% | -10.92% |
| Currencies | |||||
| U.S. Dollar Index | 87.565 | 87.460 | 0.105 | 1.41% | 14.17% |
| British pound in dollars | $1.4968 | $1.4981 | -0.0013 | -6.96% | -24.76% |
| Dollar in British pounds | £0.6681 | £0.6675 | 0.0006 | 7.48% | 32.90% |
| Euro in dollars | $1.2525 | $1.2642 | -0.0117 | -1.75% | -14.30% |
| Dollar in euros | € 0.7984 | € 0.7910 | 0.0074 | 1.78% | 16.69% |
| Dollar in yen | 95.94 | 96.88 | -0.94 | -2.72% | -14.22% |
| Canadian dollar in U.S. dollars | $0.798 | $0.812 | -$0.0141 | -3.60% | -19.67% |
| U.S. dollar in Canadian dollars | $1.255 | $1.232 | $0.0226 | 3.75% | 24.49% |
| Commodities | |||||
| Gold | $736.00 | $732.70 | $3.30 | 2.48% | -12.17% |
| Copper | $1.6095 | $1.6715 | -$0.06 | -12.00% | -47.07% |
| Silver | $9.3100 | $9.5500 | -$0.24 | -4.32% | -37.60% |
| Corn | $3.8000 | $3.8000 | $0.00 | -5.35% | -16.58% |
| Crude oil (NYMEX) (per barrel) | $53.62 | $54.39 | -$0.77 | -20.93% | -44.13% |
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