Bonds/Economy

Return to Article

U.S. Stocks Open to the Downside

Mike Taylor

Stocks on Wall Street kicked off Thursday's session with losses, as traders took in reminders that the credit crisis was still hurting major financial firms and economic data that did little to bolster confidence.

The Dow Jones Industrial Average dropped 51 points to 9089, and the S&P 500 gave back 7.4 points to 945. The Nasdaq shed 19 points to 1663.

As credit markets remained stagnant and the risk of inflation appeared to decline, the European Central Bank and the Bank of England both reduced their key interest rates Thursday. The ECB dropped its target rate 50 basis points to 3.25%, and the Bank of England slashed its rate 1.5% to 3%.

Additional corporate headlines were offering signs of trouble. Bloomberg reported that Citigroup (C Quote) and Goldman Sachs (GS Quote) have begun laying off staff as part of a plan to eliminate more than 12,000 jobs combined as the financial crisis continues.

Another report by Bloomberg indicated that Cerberus Capital may give up its stake in GMAC, which it owns jointly with GM (GM Quote). The move is intended to allow GMAC to become a bank and secure funding from the government without subjecting Cerberus to additional regulation.

Elsewhere in the financial space, Wells Fargo announced late Wednesday it would issue $10 billion in common stock.

As for economic data, the Department of Labor reported that jobless claims for the week ended Nov. 1 tallied at 481,000, higher then economists' estimate of 476,000. The previous week's figures were revised up to 485,000 from an initial tally of 479,000.

Meanwhile, the Bureau of Labor Statistics also announced that its preliminary read of nonfarm productivity came in at 1.1%, just ahead of analysts' forecasts but down substantially from 3.6% in the second quarter.

Investors were sorting through a new heap of quarterly earnings results. Tech bellwether Cisco (CSCO Quote) reported profit that was flat year over year even but issued cautious revenue guidance.

Media firm News Corp. (NWS Quote) reported declining profit and cut its 2009 guidance.

Carmaker Toyota (TM Quote) said second-quarter net income declined and it cut its full-year profit forecast.

Asset-management firm Blackstone (BX Quote) swung to a loss. The company cited tumultuous credit and equity markets as a source of its troubles.

Entertainment company World Wrestling (WWE Quote) reported a slight increase in income from the year-ago period.

Big-box retail firm Costco (COST Quote) reported that its October same-store sales were down 1%, although total revenue edged up 2%. The same-store figure fell short of analyst estimates. Fellow bulk merchant Wal-Mart (WMT Quote) announced a better-than-expected 2.4% increase in same-store sales.

Elsewhere among retailers, Amazon.com (AMZN Quote) looked to be in for a rough day following a Citigroup downgrade to hold from buy.

In other analyst actions, Goldman reduced its price target for News Corp. to $9 from $13 after the media company's earnings results missed estimates.

In the commodities space, crude oil was down $1.60 to $63.70 a barrel. Gold was gaining $12.60 to $755 an ounce.

Longer-dated U.S. Treasury securities were mixed. The 10-year note was up 2/32, yielding 3.7%, and the 30-year was declining 1/32 to yield 4.18%. The dollar was gaining on the euro and pound but falling vs. the yen.

Globally speaking, European exchanges, including the FTSE in London and the DAX in Frankfurt, were trading lower. Asian markets likewise closed to the downside.