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Dismal corporate news sends stocks plunging


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POSTED: Thursday, November 13, 2008

NEW YORK » An increasingly despondent Wall Street fell for the third straight session yesterday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all.

The stock market has lost about $1 trillion over the past three days, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks.

The market started the day falling on more signs that companies are being hurt by a severe pullback in consumer spending. Macy's Inc. said it lost $44 million in the third quarter as sales at the department store retailer fell more than 7 percent. And consumer electronics retailer Best Buy Co. slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.

Meanwhile, Morgan Stanley, suffering from the ongoing losses on Wall Street, outlined plans to cut 10 percent of staff in its institutional securities group - its biggest business that covers everything from investment banking to stock trading.

More bad news came out after the market closed - Intel Corp. lowered its fourth-quarter revenue and earnings outlook, citing a spending slowdown that is reducing demand for its computer chips. Intel's stock fell in after-hours trading, and its announcement was likely to trigger more selling across the market today.

There was more pain at mid-morning, when Treasury Secretary Henry Paulson said the government's $700 billion financial rescue package won't purchase troubled assets from banks. He said that plan would have taken too much time, and that the Treasury instead will rely on buying stakes in banks and encouraging them to resume more normal lending.

The Dow shed 411.30, or 4.73 percent, to 8,282.66. It was the lowest close for the Dow since its 5 1/2-year low of 8,175.77 reached on Oct. 27.

According to the Dow Jones Wilshire 5000 index, yesterday's paper losses amounted to about $600 billion. By that measure, the stock market has shed $9.1 trillion since the index's Oct. 9, 2007, peak.

The broader Standard & Poor's 500 index dropped 46.65, or 5.19 percent, to 852.30, and the Nasdaq composite index stumbled 81.69, or 5.17 percent, to 1,499.21.

The Russell 2000 index of smaller companies fell 29.49, or 6.11 percent, to 452.80.

Declining issues overwhelmed advancers on the New York Stock Exchange, where only 240 stocks rose while 2,869 fell. Consolidated volume came to 5.66 billion shares, up from 4.93 billion shares Tuesday.

Macy's shares fell $1.04, or 11 percent, to $8.37. Best Buy shares tumbled $1.91, or 8 percent, to $21.97.

Intel, which fell 41 cents to $13.52 during regular trading, fell to $12.56 after hours.

The three-month Treasury bill's yield fell to 0.13 percent from 0.22 percent late Monday, and the yield on the benchmark 10-year Treasury note fell to 3.67 percent from 3.76 percent late Monday.

Light, sweet crude fell $3.50, or nearly 6 percent, to settle at $56.16 a barrel on the New York Mercantile Exchange.

The dollar was mixed against other major currencies, while gold prices dipped.