Update from 9:42 a.m. EST
Stocks on Wall Street were trading in the red Thursday, as traders took in reminders that the credit crisis was still hurting major financial firms and economic data that did little to bolster confidence.
Dow Jones Industrial Average
dropped 205 points to 8934, and the
gave back 24 points to 929. The
shed 42 points to 1639.
"We're still in an environment where you can't trust any rallies," said Chip Hanlon, president of Delta Global Advisors. He said that although the stock market should turn higher before the economy does, the broader economy is due to stagnate for as much as nine more months.
However, Hanlon also said that if the Obama administration proves disinclined to raise taxes in the face of a weak economy, that could provide an upside that the market is currently not expecting.
As credit markets remained stagnant and the risk of inflation appeared to decline, the
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%.
Hanlon said that the market was anticipating rate cuts from Europe, and that there are more to come. "The global economy is still deleveraging. You're going to see more actions like these from central banks around the world," he said.
Additional corporate headlines were offering signs of trouble.
staff as part of a plan to eliminate more than 12,000 jobs combined as the financial crisis continues.
Another report by
may give up its stake in
, which it owns jointly with
. 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,
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
reported profit that was flat year over year even but issued cautious revenue guidance.
reported declining profit and cut its 2009 guidance.
said second-quarter net income declined and it cut its full-year profit forecast.
swung to a loss. The company cited tumultuous credit and equity markets as a source of its troubles.
reported a slight increase in income from the year-ago period.
Big-box retail firm
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
announced a better-than-expected 2.4% increase in same-store sales.
"In a deleveraging world, that includes the consumer, who is trying to figure out how not to take on more debt for the first time in a long time," said Hanlon of Delta Global. He said that high-end and leisure retailers should continue to feel a pinch, while discount stores like Wal-Mart will continue to benefit.
Elsewhere among retailers,
looked to be in for a rough day following a Citigroup downgrade to hold from buy.
, 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 $4.23 to $61.07 a barrel. Gold was gaining $6 to $748.40 an ounce.
Longer-dated U.S. Treasury securities were falling in price. The 10-year note was down 6/32, yielding 3.73%, and the 30-year was declining 23/32 to yield 4.22%. 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.
likewise closed to the downside.