Market fails to get Thanksgiving boost
NEW YORK » Wall Street resumed its slide yesterday as unease about the wilting mortgage market and the broader economy triggered selling ahead of the unofficial start of the holiday shopping season.
The decline in the S&P 500 left the index in negative territory for the year. Many investments such as mutual funds either track or are measured against the S&P.
The worries over the economy sent investors rushing to the safety of government securities. The yield on the Treasury's 10-year note for a time fell below 4 percent for the first time since 2005.
Stocks, which have fallen in seven of the previous nine sessions, haven't enjoyed the boost seen in recent years during Thanksgiving week, which is capped by the retail bonanza Black Friday.
Government-sponsored lender Freddie Mac, which reported a $2 billion quarterly loss Tuesday and saw shares plummet nearly 29 percent, declined again yesterday after an analyst downgrade. Countrywide Financial Corp., the nation's largest mortgage lender, lost further ground.
"People are buying and selling off the headlines. The market is so emotional," said Neil Hennessy, president and portfolio manager of Hennessy Funds.
The Dow fell 211.10, or 1.62 percent, to 12,799.94. The financial companies that are part of the 30-stock index hit fresh 52-week lows yesterday and the blue chip index is now down 9.85 percent from its mid-October trading high.
A 10 percent decline would meet the technical definition of a correction.
Broader stock indicators also fell. The S&P 500 index dropped 22.93, or 1.59 percent, to 1,416.77.
Meanwhile, the Nasdaq composite index tumbled 34.66, or 1.33 percent, to 2,562.15. The Russell 2000 index of smaller companies fell 9.03, or 1.21 percent, to 740.30.
Declining issues outnumbered advancers by 3 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with 1.87 billion traded Tuesday.
Investors turned to government bonds amid the uncertainty. The yield on the 10-year Treasury note, which moves inversely to its price, fell to 4.01 percent from 4.09 percent late Tuesday.
The dollar was mixed against most other major currencies, while gold advanced.
Crude futures fell 74 cents to settle at $97.29 per barrel on the New York Mercantile Exchange after an U.S. Energy Department report showed supplies at a closely watched oil terminal in the Midwest rose for the first time in weeks.
Wall Street is fairly confident the Fed will lower rates at its Dec. 11 meeting to keep the tight credit markets liquid, but it is uncertain about the health of the economy -- particularly given big losses at Freddie Mac and its counterpart Fannie Mae, and possible liquidity problems at Countrywide.
Amid worries that both the private and government lending industries are struggling with the mortgage market implosion, Freddie shares fell 74 cents, or 2.8 percent, to $26. However, Fannie Mae, which had been down in the session, finished up 98 cents, or 3.5 percent, to $29.23; and Countrywide fell 86 cents, or 8.4 percent, to $9.42.