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U.S. Stocks Tumble, Sending Dow Below 9,000; GM, Insurers Slide
Posted By admin On October 9, 2008 @ 11:24 am In Featured Stories | Comments Disabled
Lynn Thomasson and Jeff Kearns
Bloomberg News 
Thursday, October 9, 2008
Oct. 9 (Bloomberg) — U.S. stocks slid and the Dow Jones Industrial Average fell below 9,000 for the first time since 2003 as higher borrowing costs and slower consumer spending spurred concern carmakers, insurers and energy companies will be the next victims of the credit crisis.
General Motors Corp. tumbled 31 percent to a 58-year low and Ford Motor Co. slumped 22 percent as the outlook for car sales worsened. XL Capital Ltd. lost 54 percent and led a gauge of insurers to a 13-year low on concern investment losses will curb results. Exxon Mobil Corp.’s biggest drop in 21 years accelerated the Dow’s decline in the final hour of trading as oil retreated below $85 a barrel. Morgan Stanley plunged 26 percent as short sellers returned to the market after a three- week ban.
“People have lost faith in everything,” said Philip Orlando, who helps manage $350 billion as chief equity market strategist at Federated Investors Inc. in New York. “We’re dealing with an investment community of atheists right now. Valuations no longer matter.”
The Standard & Poor’s 500 Index retreated for a seventh day, losing 75.02 points, or 7.6 percent, to 909.92 to cap its longest streak of daily declines since 1996. The Dow Jones Industrial Average declined 678.91, or 7.3 percent, to 8,579.19. The Nasdaq Composite Index decreased 5.5 percent to 1,645.12. Twenty stocks fell for each that rose on the New York Stock Exchange.
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`Contagion of Fear’
The S&P 500 extended its 2008 tumble to 38 percent and is poised for its worst yearly performance since 1937. Its valuation slid to 10.9 times estimated earnings, the cheapest versus reported earnings since 1985. The Dow’s 35 percent tumble in 2008 puts it on course for its worst year since 1931.
“This is what happens when the contagion of fear spreads,” said Quincy Krosby, who helps manage about $380 billion as chief investment strategist at the Hartford in Hartford, Connecticut. “No one is paying attention to fundamentals. People are very, very scared. Ultimately investors decide to sell.”
All 10 industry groups in the S&P 500 tumbled at least 3.4 percent. Technology companies fell the least after International Business Machines Corp. posted higher-than-estimated profit and said the financial crisis will not hold up earnings. IBM rose as much as 5.3 percent in the morning before following the market lower and closing down 1.7 percent at $89.
Stocks rose in the first hour of trading as investors snapped up shares of technology and commodity companies trading at their cheapest price-to-earnings valuations since Bloomberg began tracking the data in 1995.
“There are problems out there, I know that, but stocks have completely overshot on the downside,” Kevin Rendino, who manages $10 billion at BlackRock Inc., told Bloomberg Television in an interview taped before stocks began their retreat. “There are a number of companies that offer unbelievable risk-reward potential.”
Almost $900 billion was wiped off the value of U.S. equities today. About 2 billion shares changed hands on the NYSE, 42 percent more than the same time last week. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurances against further declines in the S&P 500, jumped 11 percent to a record 63.92.
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URLs in this post:
 Bloomberg News: http://www.bloomberg.com/apps/news?pid=20601087&sid=aDRetp2GpqeI&refer=home
 Stocks Tumble Worldwide, Government Bonds Rise on Bank Concerns: http://www.prisonplanet.com/stocks-tumble-worldwide-government-bonds-rise-on-bank-concerns.html
 Stocks Slide on Economy Concern; Yen, Dollar, Treasuries Gain: http://www.prisonplanet.com/stocks-slide-on-economy-concern-yen-dollar-treasuries-gain.html
 Global Stocks, Dollar Tumble as Auto Bailout Fails; GM Slumps: http://www.prisonplanet.com/global-stocks-dollar-tumble-as-auto-bailout-fails-gm-slumps.html
 Dollar And Stocks Drop As China Calls For New Global Currency: http://www.prisonplanet.com/dollar-and-stocks-drop-as-china-calls-for-new-global-currency.html
 U.S. Stocks Drop, Dow Average Posts Worst 2-Day Loss Since ’87: http://www.prisonplanet.com/us-stocks-drop-dow-average-posts-worst-2-day-loss-since-87.html
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