Wednesday, October 15, 2008
Oct. 15 (Bloomberg) — U.S. stocks plunged the most since the crash of 1987, hammered by the biggest drop in retail sales in three years and growing doubt that plans to bail out banks will keep the economic slump from deepening.
Exxon Mobil Corp. and Chevron Corp. tumbled more than 12 percent as commodity prices declined on concern the slowing economy will hurt demand. Wal-Mart Stores Inc. retreated 8 percent after the Commerce Department said purchases at chain stores decreased 1.2 percent last month. Morgan Stanley lost 16 percent after Oppenheimer & Co. analyst Meredith Whitney said the government’s bank rescue is not a “panacea” solution.
The Standard & Poor’s 500 Index sank 90.17 points, or 9 percent, to 907.84, with nine companies declining more than 20 percent. The Dow Jones Industrial Average retreated 733.08, or 7.9 percent, to 8,577.91, its second-biggest point drop ever. The Nasdaq Composite Index lost 150.68, or 8.5 percent, to 1,628.33. About 37 stocks fell for each that rose on the New York Stock Exchange.
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“The state of the economy is weighing heavily on investors’ minds,” said Lawrence Creatura, a fund manager at Clover Capital Management in Rochester, New York, which oversees $2.7 billion. “This has so far been largely a Wall Street problem, but it’s starting to cross over to Main Street and the data today supports that.”
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The retreat over the past two days erased almost all of the gains in the S&P 500 and Dow on Oct. 13, when the market rallied the most since the 1930s on speculation the government’s plan to shore up banks will ease the credit crisis. Efforts to calm financial markets probably won’t result in an immediate economic rebound, Federal Reserve Chairman Ben S. Bernanke told the Economic Club of New York.
All 10 S&P 500 industries fell more than 6 percent today. The declines came after the drop in retail sales was almost twice economists’ estimates, sending Macy’s Inc. and Dillard’s Inc. down more than 15 percent. The Federal Reserve’s index of New York manufacturing slumped to minus-24.6, a record low. The data overshadowed a retreat in money-market rates and better- than-estimated earnings reports from JPMorgan Chase & Co., Coca- Cola Co. and Intel Corp.
“A big chunk of our economy is in recession right now,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.5 billion. “There’s fear the Christmas season is going to be miserable.”
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