Updated from 9:03 a.m. EDT
Stocks on Wall Street opened Wednesday with a whimper, as investors showed caution a day after the market saw an early rally completely erased by a loss of momentum in the afternoon.
Dow Jones Industrial Average
dropped 34 points to 11,483, and the
slipped 3.5 points at 1274. The
was lower by 7.1 points at 2342.
On Tuesday, the major indices rose early on a sharp decline in crude oil prices, only to give back those gains and finish in negative territory. Poor performances by energy, mining and technology stocks contributed to the reversal.
Several financial-services names held the spotlight as the new trading day began. Continuing to stoke speculation on a potential deal to help struggling brokerage
said that Korea Development Bank has inked a proposal to buy a 25% stake in Lehman. The news agency cited a report in a widely circulated South Korean newspaper.
, a commodities investment fund that is 20%-owned by Lehman, announced that it will be shutting down because of bad bets on copper and natural gas.
Elsewhere in the financial sector,
The Wall Street Journal
reported that large Chinese banks are reducing their investments in mortgage debt issued by
Woes for financial firms were not confined to the U.S. The Royal Bank of Scotland said that U.K. bank
may have to raise $13.3 billion in capital to attain liquidity levels on par with competitors.
named Tom McManus, former chief investment strategist at Banc of America Securities, as chief investment officer.
Back in merger news, beverage maker
offered to buy China Huijan Jice for about $2.5 billion.
In earnings, machinery manufacturer
reported fiscal third-quarter earnings that beat analyst estimates and raised its 2008 forecast. Office-supplies retailer
reported that second-quarter earnings dropped 16% year over year.
In the realm of commodities, crude oil was declining $1.82 to $107.89. Gold was down $2.80 at $807.70.
Shifting to economic data, employment consultancy Challenger, Gray & Christmas announced that employers announced job cuts totaling 377,325 for the summer, a 30% increase over spring layoff numbers.
Later, auto manufacturers will be revealing their August sales figures. The Census Bureau will also release data on factory orders for July. The
so-called beige book, which contains anecdotal data on the state of the economy, will come out in the afternoon.
Longer-dated U.S. Treasury securities were flat. The 10-year was even in price to yield 3.73%, and the 30-year was unchanged, yielding 4.35%. The dollar was gathering strength against the yen, euro and pound.
Overseas exchanges were mainly trading lower. The FTSE in London, the Dax in Frankfurt and the Hang Seng in Hong Kong were showing weakness, while the Nikkei in Japan was up slightly.