Updated from 9:43 a.m. EDTStocks were sulking Thursday, as traders waited for the House of Representatives to follow up on the Senate's recent passage of a $700 billion bailout plan for financial firms. The Dow Jones Industrial Average dropped 229 points to 10,602, and the S&P 500 was losing 29 points to 1132. The Nasdaq was slipping 56 points to 2013. After the close of Wednesday's trading, the Senate passed the bailout bill with a 74-25 vote. The House of Representatives had rejected an earlier version of the proposal on Monday, and the stock market responded with one of its worst performances in recent memory. Among other revisions, the bill passed by the Senate included $110 billion in tax incentives aimed at fostering economic growth. The House is expected to vote on the revised package Friday. "I think, honestly, the Senate was kind of a foregone conclusion," said Michael Church, portfolio manager at Church Capital Management. He said that the real hurdle for the rescue package has been in the House, where local interests are holding lawmakers back from passing the bill. "You look at some of the stuff that got thrown on that thing, you have to shake your head and say that some of these guys are being bought," he said. Church also said that sentiment is so awful that a short-term surprise rally isn't out of the question. In an attempt at offering additional support to the stock market, the Securities and Exchange Commission extended through Oct. 17 a ban on short sales of financial stocks. The original ban had been slated to expire today.
Meanwhile, Swiss bank UBS ( UBS) announced it would net a small third-quarter profit. Such an achievement would break a four-quarter losing streak for UBS. Bank of America ( BAC), which agreed on Sept. 14 to buy Merrill Lynch ( MER), said Merrill Chairman and CEO John Thain will join BofA as president of global banking, securities and wealth management in the combined firm. Current president of global corporate and investment banking Brian Moynihan at BofA will remain in a newly created position, the company said. Elsewhere, the Financial Times reported that private equity firm Kohlberg Kravis Roberts, together with French electric company EDF were working on a buyout deal for Constellation Energy ( CEG). In the technology space, Reuters said Japanese firm Fujitsu was in discussions with data-storage company Western Digital ( WDC) about a potential sale of Fujitsu's hard-drive business. General Electric ( GE) announced a $12.2 billion common-stock offering priced at $22.25 a share. Alan Mulally, CEO of Ford ( F), said that the automakers would continue to face a tough global market until 2010 and added that his company would not be filling for bankruptcy. Several companies reported earnings between Wednesday's and Thursday's sessions. Agricultural products maker Mosaic ( MOS) said it made a profit that surged to $2.65 a share from 69 cents year over year. Hotel operator Marriott ( MAR) reported declining profit and warned that 2009 would be a tough year. Beverage concern Constellation Brands ( STZ), meanwhile, swung to a quarterly loss due to restructuring charges. As expected, the European Central Bank kept its interest rate unchanged at 4.25% amid a dual threat of high inflation and an economic slowdown.
The day's economic data offered further reason for pessimism. The Department of Labor said that initial jobless claims for the week ended Sept. 27 rose by 1,000 to 497,000, the highest unemployment rate since 2001. The Census Bureau reported that factory orders declined 4% in August, a sharp drop-off from a 0.7% increase in July and a weaker performance than the 2.9% decline anticipated by economists. In commodities, crude oil was down $3.25 to $95.28. Gold was losing $31.20 at $856.10. Longer-term U.S. Treasury securities were higher in price. The 10-year was up 20/32 to yield 3.66%, and the 30-year was gaining 1-9/32, yielding 4.14%. The dollar was stronger against the euro and pound but falling vs. the yen. Overseas, European exchanges were declining, while Asia was mixed. The FTSE in London and the DAX in Frankfurt were trading lower. The Hang Seng in Hong Kong finished on the upside, while Japan's Nikkei ended its session with losses.