Market falls after data sparks recession fears
NEW YORK » The stock market finished with a sharp loss yesterday after bleak readings on the economy heightened investors' fears of recession. The Dow Jones industrial average fell more than 140 points.
Wall Street was disappointed when the Philadelphia Federal Reserve reported that regional manufacturing fell more than predicted. Another piece of bad news was the Conference Board's January index of leading economic indicators, which posted its fourth straight drop.
Investors have already been pricing in another interest rate cut -- perhaps up to half a percentage point -- after minutes from the Federal Reserve's last policy-setting meeting indicated central bankers will remain vigilant about the economy. The Fed meets again March 18.
"The Fed cutting rates is a little bit like a fire engine pulling up to your house," said Brian Gendreau, investment strategist for ING Investment Management. "You're happy help has arrived, but still, your house is burning down."
The Dow fell 142.96, or 1.15 percent, to 12,284.30.
The biggest loser among the 30 Dow components was General Motors Corp. after lender GMAC LLC, which is part-owned by GM, said it will slash hundreds of jobs at its auto finance business. GM fell $1.24, or 4.9 percent, to $24.30.
Broader indexes also declined. The Standard & Poor's 500 index shed 17.50, or 1.29 percent, to 1,342.53, while the Nasdaq composite index fell 27.32, or 1.17 percent, to 2,299.78. The Russell 2000 index of smaller companies fell 13.74, or 1.94 percent, to 696.28.
Declining issues led advancers by nearly 3 to 1 on the New York Stock Exchange. Consolidated volume came to a relatively low 3.55 billion shares, down from 3.75 billion shares Wednesday.
Bond prices moved sharply higher on expectations of a rate reduction. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.78 percent from 3.89 percent late Wednesday.
Light, sweet crude for April delivery dropped $1.47 to settle at $98.23 a barrel on the New York Mercantile Exchange, after the government reported that U.S. crude oil inventories increased by more than expected last week. Crude had reached a new record above $101 in overnight trading.
Gold jumped to a record yesterday, while the dollar dipped slightly against most major currencies.
French bank Societe Generale SA said a trading scandal and write-downs linked to the crisis led to a loss in the fourth quarter. The bank lost $4.91 billion, compared with a $1.73 billion profit during the same period of 2006.
BlackBerry maker Research In Motion Ltd. raised its outlook for fourth-quarter subscriber additions by about 15 percent to 20 percent, citing the popularity of smartphones in the holiday selling season. The stock surged $8.78, or 9 percent, to $106.69.
Safeway Inc. posted a slight decline in fourth-quarter profit that was in line with analyst expectations. But worries about a recent sales slowdown accelerating as shoppers battle a weakening economy and high food prices drove the grocery store operator's shares down $2.28, or 7.1 percent, to $29.66.