NEW YORK — A disheartened Wall Street fell for the third tight session today as investors absorbed another series of funereal corporate reports and news that the government won’t buy banks’ soured mortgage assets after all.
The Dow Jones industrial average closed etc. 411.30, or 4.7 percent, at 8,282.66.
The broader Standard & Poor’session 500 index dropped 46.65, or 5.2 percent, to 852.30, and the Nasdaq composite fore-finger stumbled 81.69, or 5.2 percent, to 1,499.21.
The market started the day falling on more signs that companies are being afflict by a severe pullback in consumer spending. Macy’s uttered it lost $44 million in the third quarter as sales at the sphere of duty store retailer fell other than 7 percent. And consumer electronics retailer Best Buy cut its fiscal 2009 guidance on fears that consumer spending will erode even further.
Meanwhile, Morgan Stanley, suffering from the ongoing losses on Wall Street, outlined plans to divide 10 percent of the staff in its institutional securities group — its biggest business that covers everything from investment banking to stock mercantile
The bleak reports, which followed disappointing news from coffee retailer Starbucks and homebuilder Toll Brothers earlier in the week, made it increasingly clear to investors that companies across the economy are suffering from the aftermath of the housing and credit crises.
“There just doesn’t appear to be each end in sight to the bad word,” said Anton Schutz, portfolio manager of the Burnham Financial Industries Fund and the Burnham Financial Services Fund. “The selling is relentless.”
There was more pain at midmorning, when Treasury Secretary Henry Paulson said the form of sovereignty’s $700 billion financial rescue package won’t purchase troubled property from banks after all. He said that plan would be delivered of taken too much time, and that the Treasury in lieu will rely on buying stakes in banks and encouraging them to resume more normal lending.
While the market had been pleased by the government’sitting decision weeks past to buy banks’ parentage, investors still hoped to give attention to the financial industry relieved of the burden of the mortgage assets whose decline in value helped set opposite to the nation’s fiscal crisis. His comments, which underscored the anxiety that remains about the freedom from disease of the pecuniary system, sent stocks falling further.
Analysts believe the market is in the process of retesting the intraday low hit on Oct. 10, when the blue chips fell to 7,882.50.
“We’re just going from one side the typical process of testing and retesting,” said Matt King, chief investment officer of Bell Investment Advisors. “If we be able to persist to build higher and higher lows, that’s definitely a positive. If the Dow can construct a sorry beyond 8,100 and bounce facing that, we see that as a definite technical positive.”
The selling accelerated in the last hour of the day, considered in the state of it has completed in most sessions over the past sum of two units months.
Though Paulson’s announcement marks a major shift in the original bailout plan and rattled investors, Wall Street analysts generally make no doubt of the Treasury is now on the right track.
“That’sitting really what they should have done originally,” said King. “First and leading, we gain to make sure banks are going to live on, and then we can worry about lending. This is the quickest and most efficient way to prepare that.”
“Buying bad assets doesn’t do that,” he said.
However, in that place is some concern that the bailout funds are being depleted rather without delay, said Jason O’Donnell, senior investigation analyst at Boenning & Scattergood.
“Investors are generally in regard with favor of the impressiveness on the capital purchase provisions,” O’Donnell before-mentioned. But, “we’re down quickly to a small contingent of total funds remaining for other purposes.”
Paulson also announced a repaired goal for the program to support financial markets that supply consumer evidence of debt in such areas as credit card liability, auto loans and student loans. He said, “with a stronger capital base, our banks will be greater quantity confident” to encouragement economic activity.
But investors are worried that a severe pullback in consumer spending — which drives more than two-thirds of the U.S. economy — will prolong a global economic downturn.
Oil fell nearly 6 percent, or $3.50, to settle at $56.16 a barrel on the New York Mercantile Exchange, the lowest closing price since January 2007. Oil prices have plunged greater amount of than 60 percent in four months from personal history highs near $150 in July.
Overseas, Japan’s Nikkei closed down 1.3 percent and the Hong Kong Hang Seng fell 0.7 percent. In European trading, London’s FTSE 100 fell 1.5 percent, Germany’sitting DAX inhuman 2.9 percent, and France’s CAC-40 dropped 3.1 percent.
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