Updated from 4:39 p.m. EST
Stocks in New York trudged through the red Thursday to end with losses, as investors took in economic data and gauged the likelihood of bankruptcy for Detroit's troubled automakers.
Dow Jones Industrial Average
ended down 219.35 points, or 2.5%, at 8604.99. The
lost 19.4 points, or 2.1%, at 885.28, and the
sank 26.94 points, or 1.7%, to 1552.37.
President-elect Barack Obama announced Thursday new appointments for his upcoming administration, naming
, CEO of the Financial Industry Regulatory Authority and former chair of the Commodities Futures Trading Commission, as the new head of the
Securities and Exchange Commission
. The President-elect named former Treasury official Gary Gensler as the chair of the Commodities Futures Trading Commission, and one of his economic advisors, Daniel Tarullo, to the board of the
Elsewhere in Washington, the U.S. autos' saga drags on.
denied as untrue a report in
The Wall Street Journal
that said the company and
have reopened merger talks. GM, Chrysler and
continue to await word on a federal bailout for the U.S. auto industry.
The Bush administration has said it wants to forge the
resolution for Detroit's Big Three
automakers before Dec. 25. The White House said earlier that it might be willing to use money drawn from the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program (TARP), and the Treasury also said it's prepared to pitch in after a federal rescue plan failed to pass the Senate last week. However, on Thursday White House press secretary Dana Perino reportedly referred to orderly Chapter 11 as an option.
"There's an orderly way to do bankruptcies that provides for more of a soft landing. I think that's what we would be talking about," said Perino.
"If this economy were growing and healthy, then we could absorb that kind of bankruptcy," says Quincy Krosby, Chief Investment Strategist at The Hartford. "I think most people accept the fact that we will not have three auto companies in this country, but the economy is too vulnerable to absorb the unintended consequences of even a very carefully programmed bankruptcy." One of those consequences is unemployment.
Ahead of the trading session, the Labor Department reported that new applications for
fell to a seasonally adjusted 554,000 from an upwardly revised figure of 575,000 the week before. The number came in slightly below economists' expectations of 558,000.
"It will probably get worse before it gets better," says The Hartford's Krosby. "What you want to watch for is ultimately a trend -- the deceleration will ease. "
Of course, there are a number of key unknowns, says Krosby. For instance, the upcoming administration's infrastructure stimulus plan if enacted or the potential bankruptcy of the automakers could significantly rock the trend.
Ford shares gave up 11.2% to $2.07, while General Motors gave up 16% to $3.66.
The Conference Board also released the Leading Indicators index, which comprises 10 variables, such as unemployment, inflation, consumer sentiment and new building permits. The index declined 0.4% after falling 0.8% a month prior. The Philadelphia Fed Index fell 32.9 vs. expectations for a decline of 40.5.
In company news,
reported second-quarter earnings that beat estimates by a penny a share and unveiled a plan to save costs that calls for a cut in its senior executives' pay and a one-year freeze on 401(k) contributions. FedEx gave up 2% to $62.60.
posted strong second-quarter results late Wednesday. The athletic apparel company reported net income of $391 million, or 80 cents a share, up 9%, from the $359.4 million, or 71 cents a share, it posted a year ago. Nike added 4% to $52.69.
In analyst actions, Jeffries offered a bearish view for a number of chipmakers Thursday. The firm downgraded
to underperform from hold and slashed its price target to $10 from $20; it also cut its rating for
to underperform from hold and lowered its target to $5 from $20; it also lowered its rating for
to underperform from buy and scaled back its target to $11 from $26. Shares of those stocks gave up ground Thursday.
Texas Instruments fell 7.3% to $15.06; National Semi shed 11% to $10.09; and Intel gave up 6.6% to $14.26.
"We believe the current downturn is masking the fact that the semi market is maturing and growth is slowing due to the fact that the end markets are slowing and no new product cycle is ahead of us currently," said Jefferies analyst Adam Benjamin in
Roadmap for Semiconductor Investing in 2009
, a report issued Thursday. "We believe that investors assume that there will be that next new thing to drive semi growth, however, we have not really seen any new product cycle in the Consumer or Comms end markets in the last two years."
Meanwhile, the President-elect is working on a massive
economic stimulus package
that could total $850 billion over two years to promote jobs, provide middle-class tax relief and expand aid for the poor.
said the 30-year fixed-rate mortgage fell to 5.19% with an average 0.7 point for the week ending Dec. 18., a 37-year low, with some help from the Federal Reserve. Earlier in the week, the Fed established a range for its
federal fund rate
of 0% to 0.25% and maintained that the central bank will purchase "large quantities" of agency debt and mortgage-backed securities. It's also evaluating the potential benefit of buying longer-term securities.
Moving to commodities, crude oil fell $2.04 to settle at $36.22 a barrel a day after oil-exporting cartel OPEC said it would cut production targets by another 2.2 million barrels effective in January. Gold was down $7.90 to settle at $860.60 an ounce.
Longer-dated U.S. Treasury securities were rising in price. The 10-year was rising 1 1.5/32 to yield 2.1%, and the 30-year was rising 2 17/32, yielding 2.6%. The dollar was recently stronger against the euro, pound and yen.
Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were rising. In Asia, Japan's Nikkei and Hong Kong's Hang Seng ended with gains.
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