Bank of America Corp., American Express Co. and Home Depot Inc. declined more than 3.5 percent after the total number of Americans collecting unemployment benefits reached 4.81 million. Electricite de France SA, the biggest operator of nuclear reactors, and Diageo Plc, the largest liquor maker, sank more than 4 percent in Europe after posting disappointing results. Crude oil fell to a three-week low while gold traded near a six- month high as investors sought a haven from risky assets.
“The market is deeply cynical of what’s going on and no one in Washington has any more idea than a goat what they’re doing,” said Peter Sorrentino, who helps manage $15.5 billion at Huntington Asset Management in Cincinnati. “Unemployment numbers are going to be bad for a while.”
The Standard & Poor’s 500 Index lost 2 percent to 817.33 at 9:36 a.m. in New York. The Dow Jones Industrial Average slid 146.15 points, or 1.8 percent, to 7,793.38, its lowest since November. Europe’s Dow Jones Stoxx 600 Index fell 1.9 percent, while the MSCI Asia-Pacific Index slipped 1.8 percent.
President Barack Obama’s stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world’s largest economy will contract 2 percent this year, half a percentage point more than last month’s forecast, according to the survey.
U.S. stocks gained yesterday as lawmakers neared agreement on a $789 billion plan to revive the economy. The stimulus bill, a mix of government spending and tax cuts that is smaller than the original plans approved by the House and Senate, is headed for passage in Congress by the end of this week. Governments worldwide are trying to stabilize a global economy battered by more than $1 trillion in credit losses at financial companies.
BRICs Outperform
Even with today’s drop, China, along with Brazil and Russia, Are the only major stock markets recording gains of more than 8 percent this year. India, the fourth member of the so-called BRICs, is down 1.9 percent.
Kohl’s Corp. tumbled 7.3 percent to $35.17 after Goldman Sachs downgraded the department-store chain to “sell” from “neutral” and added the shares to the firm’s “conviction sell” list.
NYSE Euronext slipped 4.4 percent to $19.69. The world’s largest owner of stock exchanges was cut to “hold” from “buy” at Citigroup Inc., which cited slowing volumes, pricing pressures and an “uphill battle” in expense reductions. The New York- based company, which lost a record $1.34 billion in the fourth quarter after writing down its purchase of Euronext NV, is trying to engineer a recovery by overhauling trading systems to cut $250 million in annual costs by 2010.
Viacom, Chipotle
Viacom Inc., owner of MTV, Comedy Central and Nickelodeon, fell 1.5 percent to $15.39 after saying fourth-quarter profit excluding some items was 76 cents a share. Analysts surveyed by Bloomberg estimated 79 cents.
Chipotle Mexican Grill Inc. gained 5.3 percent to $49.95. The burrito chain spun off from McDonald’s Corp. reported fourth- quarter profit of 52 cents a share, topping the average analyst estimate by 7.2 percent, according to Bloomberg data.
Earnings fell 35 percent on average at the 358 companies in the S&P 500 that have reported fourth-quarter results so far, according to data compiled by Bloomberg. The period is poised to be the sixth straight quarter of decreasing profits, the longest streak on record.
Results at companies from Microsoft Corp. to Procter & Gamble Co. disappointed investors last quarter as the economy shrank at the fastest pace in 26 years.
In Western Europe, profits have declined 65 percent for 515 companies that have released earnings since Jan. 12, according to Bloomberg data.
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Last Updated: February 12, 2009 09:37 EST
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