U.S. Stocks Drop

U.S. stocks fell and the Standard & Poor's 500 Index extended its worst monthly drop in six years as General Electric Co.'s profit estimates were cut and an industry report showed manufacturing contracted more than forecast.

GE, the second-largest U.S. company by market value, dropped as much as 9.5 percent as Deutsche Bank AG said profits will be hurt by ``deterioration'' at its financial-services unit. Ford Motor Co. tumbled 10 percent after saying earnings in Europe will decline. Peabody Energy Corp. lost 14 percent to lead declines in all 40 energy companies in the S&P 500 as crude prices slid on speculation the economy will slip into recession.

The S&P 500 lost 19.94, or 1.7 percent, to 1,146.42 at 11:25 a.m. in New York. The Dow Jones Industrial Average slipped 156.27, or 1.4 percent, to 10,694.39. The Nasdaq Composite Index fell 35.92, or 1.7 percent, to 2,055.96. Three stocks declined for each that rose on the New York Stock Exchange.

The S&P 500 erased about a third of its 5.4 percent gain yesterday. Stocks extended declines after the Institute for Supply Management's manufacturing index for September slid to 43.5, below the 49.5 reading forecast by economists in a Bloomberg survey and the threshold for growth at a level of 50.

The benchmark index for U.S. equities jumped the most in six years yesterday as expectations grew that lawmakers will salvage a $700 billion rescue package to buy bad loans from banks. Even with yesterday's advance, the S&P 500 had its worst month since 2002 in September, declining 9.1 percent, and tumbled 8.9 percent for the third quarter.

Brazilian stocks fell for the third time in four days, led by banks and commodity producers, on concern the global credit crisis will make it difficult for companies to raise cash, hurting the outlook for earnings. The Bovespa index dropped 1,203.89, or 2.4 percent, to 48,337.38 at 10:25 a.m. New York time.

Earlier Asian stocks climbed, snapping a six- day losing streak, on speculation the U.S. Senate will approve a $700 billion bank-rescue plan to revive credit markets and support the global economy.

The MSCI Asia Pacific Index climbed 1.8 percent to 108.91 as of 8:33 p.m. in Tokyo, with financial shares accounting for 38 percent of the advance. The gauge lost 8.6 percent in the previous six days as the failures of Washington Mutual Inc. and Bradford & Bingley Plc, record-high bank borrowing costs, and the rejection of the rescue plan rattled investor confidence.

Japan's Nikkei 225
Stock Average gained 1 percent to 11,368.26. Most markets in Asia rose. China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were shut for holidays. Russia's Micex Index added as much as 2.4 percent in Moscow trading.

Indian stocks advanced for a second day on speculation U.S. lawmakers will approve a $700 billion plan to rescue financial companies and revive credit markets. The Bombay Stock Exchange's Sensitive Index, or Sensex, gained 195.24, or 1.5 percent, to 13,055.67.

Australia's stocks surged, led by financial companies, on expectations U.S. lawmakers will salvage a $700 billion rescue package for banks. The S&P/ASX 200 Index rose 4.2 percent to 4,794.60 at the close in Sydney, the most in more than a week.

Stocks in Europe Gain. The MSCI World Index added 0.7 percent to 1,191 at 12:53 p.m. in London. Europe's Dow Jones Stoxx 600 Index rose 0.6 percent. The U.K.'s benchmark stock index, the FTSE 100, rose 0.53 percent at the close.

TradingEconomics.com, Bloomberg.com
10/1/2008 8:48:59 AM