Skip to content
Link copied to clipboard
Link copied to clipboard

Markets pull back because of economic woes

NEW YORK - Wall Street turned cautious yesterday after a two-day rally as corporate news reminded investors of the magnitude of the economy's troubles.

NEW YORK - Wall Street turned cautious yesterday after a two-day rally as corporate news reminded investors of the magnitude of the economy's troubles.

Although the market was down sharply, the pullback was uneven. The Dow Jones industrials fell 242 points, or 2.72 percent, but the Nasdaq composite index fell a more moderate 1.55 percent as investors decided to buy some hard-hit technology names.

Demand for the safety of Treasury bills spiked so high that investors were willing to earn no return. Interest rates on four-week Treasury bills slid to zero from 0.04 percent in an auction just a week earlier.

Investors are worried that companies' difficulties could make an economic turnaround difficult. FedEx Corp., a barometer of the U.S. economy, cut its forecast for fiscal 2009 earnings and capital spending late Monday as the slumping economy eroded package deliveries. Danaher Corp., which makes bar-code readers and Craftsman tools, reduced its fourth-quarter profit forecast and announced plans to cut 1,700 jobs.

The Dow Jones industrial average fell 242.85, or 2.72 percent, to 8,691.33 after rising 560 points over Friday and Monday.

The Standard & Poor's 500 index fell 21.03, or 2.31 percent, to 888.67. The Nasdaq composite index fell 24.40, or 1.55 percent, to 1,547.34.

The Russell 2000 index of smaller companies fell 15.67, or 3.26 percent, to 465.71.

The stock market's run since last month has led to some hopes that stocks might be carving out a sustainable recovery. Since reaching multiyear trading lows on Nov. 20, the Dow has risen 15 percent and the broader Standard & Poor's 500 index has risen 18.1 percent, while the Nasdaq is up 17.6 percent, even with yesterday's decline.

Oil prices fell even amid investor expectations that OPEC would announce a big production cut next week to curb crude's 70 percent free fall over the last five months. Light, sweet crude fell $1.64 to settle at $42.07 a barrel on the New York Mercantile Exchange.

Wall Street is waiting for lawmakers to finish negotiating a $15 billion bailout for General Motors Corp. and Chrysler L.L.C. A deal reportedly would give the government an ownership stake in the automakers. The market has been concerned that a collapse of GM, Chrysler or Ford Motor Co. would trigger massive job losses, and further stymie the government's efforts to lift the United States out of a recession.

GM fell 23 cents, or 4.67 percent, to $4.70, while Ford fell 15 cents, or 4.44 percent, to $3.23. Chrysler is not publicly traded.

FedEx tumbled $10.78, or 14.48 percent, to $63.65, after issuing its forecast. Danaher fell $2.18, or 4.20 percent, to $49.78.

But companies that make microchips saw some buying despite a disappointing forecast from Texas Instruments Inc. Texas Instruments rose 73 cents, or 4.93 percent, to $15.55, while Intel Corp. rose 36 cents, or 2.58 percent, to $14.30.