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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
The Dow Jones industrials plunged 445 points today, and the Standard & Poor's 500 Index fell to levels last seen in April 1997.
The latest chapter of the Great Crash of 2008 left investors staring at the reality that the value of the U.S. stock market has been halved in roughly 13 months. That's the biggest overall market decline since the 83% drop between 1930 and 1932, according to the Stock Traders Almanac.
As the selling erupted, few areas of the markets were left unscathed -- not even utilities, historically a safe haven for investors.
The sell-off was due to falling oil prices, unhappiness that Congress and the Bush Administration couldn't agree on a rescue package for the automakers and more bad economic news, including the biggest gain in weekly jobless claims in 16 years.
The Dow closed at 7,552, off 5.6% on the day. The blue-chip index finished at its lowest level since Oct. 10, 2002, the day after its 2002 bottom. It was the Dow's second loss in a row and seventh in the last 10 sessions.
The S&P 500 was down 54 points, or 6.7% to 752, its worst close since April 14, 1997. The close also was below 776.76, the closing low in the bear market that erupted after the dot-com bust and the Sept. 11, 2001, terror attacks.
The NasdaqComposite Index was down 70 points, or 5.1%, to 1,316, its lowest close since March 12, 2003.
Crude oil fell to $49.62 a barrel, down 7.5% from Wednesday and its first close below $50 since May 2005. The price break sent energy stocks sharply lower.
Meanwhile, financial stocks were battered, with Citigroup (C, news, msgs) down 26.4% to $4.71; more than 724 million shares changed hands. Citigroup shares have fallen 50% this week alone and are down 84% this year.
The crisis is so acute, The Wall Street Journal reported late today, that company executives have begun weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright. The company's board will meet Friday to discuss the prospects.
That news caused some nibbling at the stock, which was up 7.6% to $5.07 in after-hours trading.
Ready for a snap-back rally?
The Dow has fallen 945 points this week, and many observers believe it has become terribly oversold. Prices of stock index futures were rising this evening, suggesting that some investors agree. Stocks in Japan, Australia and New Zealand opened lower, however.As bad as today's numbers were, a number analysts believe the U.S. market has further to fall. Technical analyst Louise Yamada told CNBC today that the market will see a number of short-term rallies. But she thought the S&P could drop first to 600 and then possibly to 400. "We're looking at a very serious decline," she said.
The preferred place to park money today was Treasury securities. The yield on a 13-week Treasury bill fell to 0.005%, which basically meant an investor was paying a premium for the safety of simply getting his money back.
General Motors (GM, news, msgs) was the only winner among the 30 Dow stocks, closing up 3.2% to $2.88. Citigroup and JPMorgan Chase (JPM, news, msgs), down 17.9% to $23.38, were the Dow laggards.
Only 23 S&P 500 stocks were higher, led by Interpublic Group (IPG, news, msgs), one of the largest advertising companies, up 18.4% to $3.09.
Meanwhile, just 12 Nasdaq-100 stocks showing gains, led by PetSmart (PETM, news, msgs), up 11.4$ to $14.84.
Volume was heavy, with 2.2 billion shares traded directly on the New York Stock Exchange and 3.2 billion shares on Nasdaq. Both were about a third more than average.
While Citigroup and JPMorgan were the Dow laggards, energy stocks were the weakest link for the market overall.
ExxonMobil (XOM, news, msgs) was off 6.7% to $68.51. Chevron (CVX, news, msgs) was down 8.8% to $64.40. The two stocks subtracted about 89 points from the Dow.
Oil services stocks were much harder hit: Schlumberger (SLB, news, msgs) fell 16.3% to $39.60. Transocean (RIG, news, msgs) fell 17.3% to $55.40.
Today's selling left the Dow down 47% from its peak in 2007, and the S&P 500 down 52%. The Nasdaq has lost 54% of its value. The Dow is down 19% on the month, with the S&P 500 down 22.3% and the Nasdaq off 23.5%.
Since peaking at 1,565 in October 2007, the S&P 500 has lost $6.69 trillion in market value, according to S&P index analyst Howard Silverblatt. That loss is nearly $1 trillion more than the $5.76 trillion lost during the entire 2000-02 bear market.
| Most recent close * | Change from closing peak | Date of peak | |
|---|---|---|---|
| Dow Jones Industrial Average | 7,552.29 | -46.68% | Oct. 9, 2007 |
| S&P 500 Index | 752.44 | -51.93% | Oct. 9, 2007 |
| S&P 100 Index | 367.10 | -49.70% | Oct. 9, 2007 |
| Nasdaq Composite Index | 1,316.12 | -53.97% | Oct. 31, 2007 |
| Nasdaq-100 Index | 1,036.51 | -53.71% | Oct. 31, 2007 |
| S&P Midcap 400 Index | 417.12 | -54.52% | Oct. 9, 2007 |
| Russell 2000 Index | 208.21 | -53.20% | July 13, 2007 |
| Dow Jones Utilities Average | 385.31 | -54.98% | Dec. 10, 2007 |
| Dow Jones Transportation Average | 4,179.70 | -14.55% | July 19, 2007 |
| Nikkei 225 Index (Japan) | 13,325.94 | -23.67% | Oct. 11, 2007 |
| FTSE 100 Index (Britain) | 5,578.20 | -17.12% | Oct. 12, 2007 |
| Dax Index (Germany) | 6,790.19 | -15.56% | Oct. 12, 2007 |
Dell provides some cheer
After the close, personal computer maker Dell (DELL, news, msgs) posted a better-than expected quarterly profit, crediting cost cuts and new products, sending its shares up 6%.Dell was facing subdued expectations for the October quarter. The company warned in September, just weeks after reporting second-quarter results, that it was seeing "further softening" in global demand.
Dell said it earned $727 million, or 37 cents a share, in the fiscal-third quarter. That was down from $766 million, or 34 cents a share, a year ago. Per share earnings rose as Dell bought back shares. Reuters said the average analyst estimate was 31 cents a share.
Revenue fell 3% to $15.16 billion, below the consensus estimate of $16.3 billion.
The company said in a statement that it believes global technology demand will continue to be "challenging."
Dell shares had closed down 5.2% to $9.81 in regular trading but jumped 5.4% to $10.34 after hours.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Crude oil (NYMEX) (per barrel) | $49.62 | $53.62 | -$4.00 | -26.82% | -48.30% |
Heating oil (per gallon) | $1.6759 | $1.7597 | -$0.0838 | -16.47% | -36.74% |
Natural gas (per million BTU) | $6.3160 | $6.7430 | -$0.4270 | -6.88% | -15.60% |
Unleaded gasoline (per gallon) | $1.0070 | $1.1070 | -$0.1000 | -30.13% | -59.57% |
A gift from Fannie and Freddie amid all the bad news
Mortgage finance companies Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) are suspending foreclosures for about 16,000 households during the holiday season.The two companies said today that they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program announced last week.
Fannie Mae said about 10,000 households would be affected, while Freddie Mac said the changes would affect about 6,000 borrowers who are facing foreclosure. The change does not apply to vacant homes.
The announcement "provides a new measure of certainty to many of these families during the holidays," Freddie Mac Chief Executive David Moffett said in a release.
Meanwhile, the Labor Department said that initial jobless claims rose by 27,000 last week to 542,000 -- a 16-year high and higher than the 503,000 economists had expected.
Continuing jobless claims jumped by 109,000 to 4.01 million last week, according to the Labor Department data -- the highest level since Dec. 12, 1982. The economy has shed nearly 1.2 million jobs so far this year.
A report on manufacturing in the Philadelphia area showed continued deterioration in the sector. The Federal Reserve Bank of Philadelphia manufacturing index fell to a reading of negative 39.3 in November, from a reading of negative 37.5 in October. In September, the index showed expansion, with a reading of 3.8.
Meanwhile, the Conference Board's report on leading economic indicators provided more evidence of the economic downturn. The index fell 0.8% in October, following a 0.1% gain in September.
Asian stocks had tumbled overnight. Japan's Nikkei 225 Index tanked 6.9%, the Hong Kong Hang Seng Index fell 5.1%, and the MSCI Asia Pacific Index lost 5.2%.
In Europe, the picture was not much better. London's FTSE 100 Index fell 3.2%, the Paris CAC 40 Index lost 2.9%, and the broader DJ Stoxx 600 Index was down 3%.
Falling demand drops crude oil
Crude oil continued to fall today on worries that demand won't pick up any time soon amid the global economic slowdown.Worse, crude oil supplies in the United States have risen 8.1% in the last two months, oil analyst Stephen Schork wrote today in the Schork Report, an industry newsletter.
The average price of gasoline has fallen as well. Motorists were paying $2.02 for a gallon of regular unleaded, according to the AAA Fuel Gauge report, down more than 50% from a record $4.14 a gallon on July 17.
An auto deal comes and goes
It was a deeply frustrating day for the embattled auto industry.Reports circulated this afternoon that some members of the Senate had reached a bipartisan agreement to bail out the troubled U.S. automakers. The group includes Republicans Chris Bond of Missouri and George Voinovich of Ohio and Debbie Stabenow and Carl Levin of Michigan.
The Wall Street Journal said that the plan would speed release of $25 billion in already approved loans designed to help the industry meet higher fuel-economy standards.
But similar approaches have been opposed by senior Democrats, including House Speaker Nancy Pelosi. They've pushed an alternative measure that would carve $25 billion for the industry out of the $700 billion financial rescue fund. The compromise bill faces other hurdles, especially from liberals who don't want any retreat from environmental mandates on the industry.
At about 1:30 p.m. ET, news reports said auto bailout legislation would not be taken up until after Thanksgiving.
Late Wednesday, Senate Majority Leader Harry Reid, D-Nev., canceled a vote on an emergency bailout for the Big Three U.S. automakers. The Senate had wanted the bailout funds to come from the $700 billion financial rescue plan that was passed and signed into law in October.
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Gettelfinger acknowledged there is disagreement about how aid should be given, but "both the Bush administration and congressional leaders agree that immediate assistance is needed, and the cost of not acting would be devastating."
Gettelfinger says without help, one or more of the Detroit Three automakers could collapse by the end of this year, and "the costs that would come from this are just too great."
Stock Charts (Year)
General Motors
Ford Motor
The Big Three have asked for a $25 billion bridge loan to avert bankruptcies. GM and Chrysler have said they are running out of money, with GM possibly running out of cash by the end of the year, without assistance.
In addition to GM's gain today, Ford was up 10.3% to $1.39. Chrysler is private and does not trade.
The debate in Congress was heated.
"Maybe you can tell us what you're actually going to do to sell cars people want," Rep. Gary Ackerman, D-N.Y., said Wednesday. "Somebody heard that we're giving out free money in Washington. They're showing up from all over the place. But you don't want to put your last tourniquet on a dead guy."
Others urged bankruptcy for the automakers.
"If General Motors, Ford and Chrysler get the bailout their chief executives asked for . . . you can kiss the American automotive industry goodbye," Mitt Romney, former governor of Massachusetts and a venture capitalist, wrote in an op-ed in The New York Times Wednesday. "A managed bankruptcy may be the only path to the fundamental restructuring the industry needs."
In September, Congress approved $25 billion in loans to the auto industry to help them convert to more fuel-efficient vehicles.
GM CEO Rick Wagoner hinted that he would step down if the government asked him to in exchange for aid.
"I'll always do what's right for the company," Wagoner told Bloomberg Television Wednesday. "But even more critical during a difficult time period is having the best possible management team. We have a good team at GM. That's not what I would recommend."
In testimony Wednesday before the House Financial Services Committee, Wagoner said 3 million jobs would be lost in the first year if the automakers went under.
Citi gets a confidence boost -- but plunges anyway
Citigroup's huge loss today came despite an injection of confidence from one of its biggest stakeholders.Saudi Arabian billionaire Prince Alwaleed bin Talal took advantage of the decline in the stock price and bought shares. The prince said he will increase his stake in Citigroup to 5% from his current stake of just less than 4%.
Stock Chart (Year)
Citigroup
But the move did little to help Citigroup stock.
On Wednesday, Citigroup said it was buying the remaining $17.4 billion in assets in its structured investment vehicles -- investment products that dealt heavily in risky debt. Earlier this week, the bank said it will cut 52,000 to 53,000 jobs.
Citi has raised $50 billion in private capital, the bank's statement said, in addition to the $25 billion that the U.S. government has provided under the Troubled Asset Relief Program.
GMAC wants to be a bank
GMAC, the financing arm of General Motors, is the latest company to apply to the Federal Reserve for bank holding status.The company wants the new status so that it can access the government's $700 billion in rescue funds.
"As a bank holding company, GMAC would obtain increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses," GMAC said in a statement.
Goldman Sachs (GS, news, msgs) and Morgan Stanley (MS, news, msgs) are two other companies that made the switch in recent weeks to access the bailout money.
Andrew Rosenbaum contributed to this report.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
Treasurys | |||||
13-week Treasury bill | 0.005% | 0.065% | -0.060 | -98.85% | -99.84% |
5-year Treasury note yield | 1.937% | 2.091% | -0.154 | -31.34% | -43.94% |
10-year Treasury note yield | 3.144% | 3.391% | -0.247 | -20.81% | -22.08% |
30-year Treasury bond yield | 3.699% | 3.972% | -0.273 | -15.34% | -17.04% |
Currencies | |||||
U.S. Dollar Index | 88.295 | 87.565 | 0.730 | 2.26% | 15.12% |
British pound in dollars | $1.4734 | $1.4966 | -0.0232 | -8.41% | -25.93% |
Dollar in British pounds | £0.6787 | £0.6682 | 0.0105 | 9.19% | 35.01% |
Euro in dollars | $1.2458 | $1.2506 | -0.0048 | -2.28% | -14.76% |
Dollar in euros | € 0.8027 | € 0.7996 | 0.0031 | 2.33% | 17.32% |
Dollar in yen | 93.67 | 95.75 | -2.08 | -5.02% | -16.25% |
Canadian dollar in U.S. dollars | $0.771 | $0.798 | -$0.0269 | -6.77% | -22.31% |
U.S. dollar in Canadian dollars | $1.297 | $1.253 | $0.0437 | 7.28% | 28.72% |
Commodities | |||||
Gold | $748.70 | $736.00 | $12.70 | 4.25% | -10.66% |
Copper | $1.5800 | $1.6095 | -$0.03 | -13.61% | -48.04% |
Silver | $9.0250 | $9.3100 | -$0.29 | -7.25% | -39.51% |
Corn | $3.6550 | $3.8000 | -$0.15 | -8.97% | -19.76% |
Crude oil (NYMEX) (per barrel) | $49.62 | $53.62 | -$4.00 | -26.82% | -48.30% |
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