Wall Street plunges on recession fears
NEW YORK – Wall Street skidded lower in another fitful session Tuesday, with investors worried that the tumbling economy may not only cripple mortgage lenders like Countrywide Financial Corp. but also create problems for other companies like AT&T Inc. The Dow Jones industrials fell nearly 240 points.
Investors tried to take the market higher at many points during the day, but eventually succumbed to another stream of bad news. The Dow and the Standard & Poor’s 500 index are down more than 5 percent this year and the Nasdaq composite index is down nearly 8 percent, having been pummeled since Jan. 1 because of worse-than-anticipated readings on the economy.
The day’s events raised fears that fourth-quarter earnings reports, which start pouring in later this week, may not meet already lowered expectations.
In the morning, the National Association of Realtors said its index tracking pending U.S. home sales fell 2.6 percent in November, a larger decline than the market expected. Jitters about the profitability of Countrywide and KB Home kept Wall Street on edge throughout the day, and President Bush reiterating the problems facing the economy likely added to the market’s uneasiness.
The day’s abortive advance was due in part to rising hopes that the Federal Reserve, seeing the same bleak economic numbers as Wall Street, will continue its campaign of rate cuts to prevent a recession. The Fed meets Jan. 29-30.
The Dow fell 238.42, or 1.86 percent, to 12,589.07, after ratcheting up and down through the day.
Broader stock indicators also sank. The S&P 500 index dropped 25.99, or 1.84 percent, to 1,390.19, and the Nasdaq, reflecting uneasiness about tech stocks after AT&T’s news, declined 58.95, or 2.36 percent, to 2,440.51.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.78 percent from 3.84 percent late Monday.
Recession fears have been thwarting stock rally attempts so far this year, said Richard Sparks, senior equities analyst at Schaeffer’s Investment Research. Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange. Consolidated volume came to 4.62 billion shares, up from 4.10 billion shares Monday.
The Russell 2000 index of smaller companies fell 19.09, or 2.64 percent, to 704.86.
Japan’s Nikkei stock average rose 0.19 percent. Hong Kong’s Hang Seng index fell 0.25 percent. Britain’s FTSE 100 rose 0.33 percent, Germany’s DAX index added 0.42 percent, and France’s CAC-40 rose 0.79 percent.