Update from 3:53 p.m. ESTStocks on Wall Street took a severe pummeling and closed with heavy losses Thursday, as economic data releases pointed to a prolonged downturn and companies reported job cuts, weak earnings and flagging sales. The Dow Jones Industrial Average sank 443.48 points, or 4.9%, to 8695.79, and the S&P 500 gave back 47.89 points, or 5%, to 904.88. The Nasdaq shed 72.94 points, or 4.3%, to 1608.70. In rising off its Oct. 27 lows, the market went from an oversold level to overbought in a very short period, said Robert Pavlik, chief investment officer at Oaktree Asset Management. "It's working off some of that overbought condition," he said. The market has overreacted to a thawing credit market, he said. "I still think there's weakness ahead that just hasn't been factored in." Pavlik also said that the market has been trading on low volume, meaning that buyers have not committed to making a stand. "I think what you're seeing now is the folks that did that recent buying from the lows of the 10th or the 27th on the hopes of catching something, some kind of major reversal are now getting out of it." "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.
- Tech bellwether Cisco (CSCO) reported profit that was flat year over year even but issued cautious revenue guidance. The stock skidded 2.6% to $16.94.
- Media firm News Corp. (NWS) reported declining profit and cut its 2009 guidance, and shares stumbled 16% to $8.31.
- Brewery Anheuser-Busch (BUD) reported that its third-quarter results declined 5.7% year over year thanks to charges related to its upcoming sale to European beverage concern InBev. Anheuser-Busch shares climbed 1.5% to $64.58.
- Carmaker Toyota (TM) said second-quarter net income declined and it cut its full-year profit forecast. Shares plummeted 17% to $67.09.
- Asset manager Blackstone (BX) swung to a loss. The company cited tumultuous credit and equity markets as a source of its troubles. Its stock gave back 12% to $7.55.
- Utility company PG&E (PCG) reported income that increased 9% year over year and reaffirmed its 2008 and 2009 forecasts. Shares edged down 5.3% to $34.36.