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Stocks Mired in Losses

Mike Taylor

Stocks in New York were trading with losses Monday, as investors took profits from the previous week's gains and major firms across sectors undertook restructuring measures amid a weakening economic environment.

The Dow Jones Industrial Average slid 372 points to 8457, and the S&P 500 fell 45 points to 851. The Nasdaq was lower by 79 at 1456.

At the end of an abbreviated session Friday, the major averages finished on the upside in light trading. Investors were monitoring the retailers as consumers flocked to stores to partake in "Black Friday" sales, which mark the beginning of the holiday shopping season. Today marks "Cyber Monday," when online retailers compete for Internet sales by offering steep discounts through their Web sites.

The new session also offers occasion for investors to close the book on November, which was filled with wild market swings, including a five-day surge in the Dow and S&P that closed out the month. "We've had a lot of very extreme and in some cases bizarre market movements," said Brian Gendreau, investment strategist at ING Investment Management. He said that much of the volatility has been due to hedge-fund redemptions. That process may be anywhere between half to three-quarters done, he said.

Gendreau said he had been hoping for a bounce in the major averages that follows a major selloff and additional support from the end of the presidential race. "Maybe we got it, but maybe that was it," he said of November's month-end rally.

Ahead of Monday's trading, beleaguered automaker General Motors (GM Quote) was ironing out a plan to cajole Congress into giving it federal money, according to a report by The Wall Street Journal. The report indicated that GM's board is willing to explore all restructuring options, including a Chapter 11 bankruptcy filing, if it can't secure government funds.

Over the weekend, another report by the Journal said that GM was exploring other plans to shore up its balance sheet, including offering its debt holders the opportunity to swap credit for equity.

As the carmakers faced dire circumstances, the United Auto Workers called for Congressional aid for the Big Three.

Fellow automaker Ford (F Quote) said it was considering a possible sale of its Volvo brand. The move comes amid a decline in global auto demand and Ford's efforts to bolster its balance sheet, the company said.

Hoping to reach a bailout deal, the automakers are expected to present before Congress on Tuesday plans for revamped business models and improved long-term viability.

The Journal also reported that Delta Air Lines (DAL Quote) would scale back its orders for Boeing's (BA Quote) new 787 Dreamliner and instead add to its orders for the long-range 777-200LR.

In the financial sector, Citigroup (C Quote) bought a highway business from Spanish construction firm Sacyr Vallehermoso for $10 billion. Media reports also suggested Citi would sell its Japanese trust banking unit for $416.7 million.

Meanwhile, Morgan Stanley (MS Quote) may buy regional banks to expand its retail banking footprint after becoming a bank holding company in September, according to a Journal report.

AIG (AIG Quote) announced it was selling its Switzerland-based AIG Private Bank wealth management business to Abu Dhabi firm Aabar Investments

Beyond the financial sector, Johnson & Johnson (JNJ Quote), meanwhile, said it would buy breast-implant maker Mentor (MNT Quote) for $1.07 billion.

Gendreau of ING said M&A activity had fallen off as capital and credit, which had supported deal brokering, became increasingly scarce this year. On the other hand, "With all of these extreme market movements, there have to be some mispricings."

As to analyst actions, Occidental (OXY Quote) garnered an equal-weight rating at Morgan Stanley. Insurer Prudential (PRU Quote) was upgraded to buy from hold at Citigroup on valuation.

Microsoft (MSFT Quote), meanwhile, suffered a reduced price target at Morgan Stanley.

Looking at the day's economic data, the Census Bureau's October construction spending figures showed a 1.2% decline compared with flat spending for September.

The Institute for Supply Management's November manufacturing index registered at 36.2, a 26-year low. Economists were expecting a reading of 37.

"However you look at the numbers the message is the same; manufacturing is in freefall, with output collapsing. We see no prospect for near-term improvement," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. He said the survey is an indication that the recession will continue.

In the realm of commodities, crude oil for January delivery was down $4.55 to $49.88 a barrel. On Saturday, OPEC said it will forgo new reductions in output but did not rule out a supply cutback going forward. Gold was down $49.10 to $769.90 an ounce.

Longer-dated U.S. Treasury securities were rising in price. The 10-year note was gaining 24/32 to yield 2.83%, and the 30-year was up 2-3/32, yielding 3.34%. The dollar was rising vs. the euro and pound but falling against the yen.

Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were trading lower. In Asia, Japan's Nikkei closed with losses, while Hong Kong's Hang Seng ended on the upside.