Another Downer for Stocks
Major indexes fell 4%-5% Thursday as investors weighed disappointing earnings news and arrogant rate cuts overseas. Friday’s jobs report could be desolating
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U.S. stocks adhering Thursday extended the steep losses from the previous sitting, through the Dow industrials logging a promote straight decline of over 400 points. A negative watch from technology bellwether Cisco Systems (CSCO) weighed on sentiment, at the same time that did weak sales reports from U.S. retailers.
Other major global equity indexes finished solidly in the red Thursday while the Bank of England divide its benchmark interest rate by a stunning 1.5 foundation points and the European Central Bank eased by 50 basis points at their respective policy meetings Thursday. These moves underscore the severity of the global recession, according to S&P MarketScope.
On the eve of the U.S. Labor Dept.’s eagerly awaited agency report for Octover, scheduled during the term of release at 8:30 a.m. ET Friday, investors fretted about the health of the U.S. labor market. Financial giants Goldman Sachs (GS) and Citigroup (C) indicated they will be cutting about 12,000 jobs. Wall Street bonuses are also expected to be cut sharply. Many on Wall Steet were also awaiting General Motors’ (GM) announcement Friday of major cash-savings plans, what one. could possibly include big layoffs.
Economists see a bleak consequence for Friday’sitting U.S. employment report. Nonfarm payrolls are seen falling 220,000 to 260,000 in October, with the unemployment rate rising to 6.3%.
Investors were trying to gauge the severity of the global recession following a report third-quarter U.S. productivity rose 1.1%, while unit take pains costs rose 3.6%. Weekly initial jobless claims fell 4,000 to 481,000.
On Thursday, the Dow Jones industrial average finished lower by means of 443.48 points, or 4.85%, to 8,695.79. All 30 Dow component stocks tumbled one day in the pattern of Wednesday’s 486-point (5.05%) loss.
The broader S&P 500 index lost 47.89 points, or 5.03%, to 904.88, following Wednesday’s 5.27% decline.
The tech-heavy Nasdaq composite index hut 72.94 points, or 4.34%, to 1,608.70, hind a 5.53% drop in the antecedent session.
On the New York Stock Exchange, 26 stocks were lower in price for every five that advanced. The ratio on the Nasdaq was 22-6 negative.
The VIX equity volatility index, the stock market’s favored “fear gauge”, climbed 16% in Thursday’s session to 63.68.
Bonds turned in a mixed work Thursday as Congress and the Treasury worked on bailout plans. The dollar index rose following the interest appraise cuts in Europe. Gold and crude oil futures declined.
European funds slumped Thursday, with London stocks falling 5.70%, Frankfurt shedding 6.84%, and Paris down 6.38%. Asian markets closed solidly lower, with Tokyo stocks down 6.53%, Hong Kong take down by means of 7.08%, and Shanghai shedding 2.44%.
The Financial Times reports that the Bank of England slashed interest rates through 1.5 percentage points to 3% in a wholly-unexpected affect during the time that it cited “marked degeneracy in the outlook for economic activity at family circle” in the teeth of “the most staid disruption for almost a century” in the global banking system. The Bank said UK output fell sharply in the third quarter and business surveys and reports by the Bank’s regional agents epigrammatic to “continued accurate retraction” in the months ahead. It cited faltering consumer expenditure as home budgets were squeezed and confide in from external sources dried up. “The past two months have seen a substantial downward shift in the prospects during the term of inflation in the United Kingdom,” the Bank declared in a account.
The BoE also noted that while “the measures taken put forward bank capital, funding and liquidness in several countries, including our own, have begun to freedom from stiffness the situation, the availability of credit to households and businesses is likely to stay restricted for some time. As a consequence, money and credit conditions have tightened sharply.”
The European Central Bank cut concern rates by 50 basis points, with the key refi rate now at 3.25%. This was in line with consensus expectations, but there had been some speculation of a bolder move.
