U.S. Stocks Retreat

U.S. stocks fell as a report showed manufacturing contracted more than forecast and analysts cut earnings estimates on industrial companies, overshadowing Warren Buffett's $3 billion investment in General Electric Co.

Benchmark indexes pared their declines as Bank of America Corp. and Citigroup Inc. climbed more than 8 percent on speculation Congress will approve the $700 billion financial- rescue plan. GE dropped as much as 9.8 percent as Deutsche Bank AG said profit will be hurt by ``deterioration'' at its financial unit, then trimmed losses on plans to raise $15 billion from Buffett and others. Ingersoll-Rand Co. and Parker Hannifin Corp. slid as much as 6 percent on Citigroup analysts' prediction that credit losses will delay spending on equipment.

The S&P 500 retreated 5.05, or 0.43 percent, to 1,161.04 at 3:59 p.m. in New York, extending its biggest monthly drop in six years. The Dow Jones Industrial Average slipped 16.33, or 0.2 percent, to 10,831.55. The Nasdaq Composite Index fell 22.48, or 1.1 percent, to 2,069.4. Two stocks declined for each that rose on the New York Stock Exchange.

The S&P 500 pared a morning decline of as much as 2.2 percent after the Senate set a vote for tonight on the bank bailout. The index fell to its low of the day earlier on the Institute for Supply Management's report showing its manufacturing gauge for September slid to 43.5, below the 49.5 reading forecast by economists in a Bloomberg survey and the threshold for growth at 50.

Canadian stocks extended their decline, after the biggest monthly drop in a decade, as energy producers and industrial companies fell on concern that the $700 billion U.S. rescue plan for banks won't stave off a recession.  The Standard & Poor's/TSX Composite Index fell 0.6 percent to 11,687.15 at 3:16 p.m. in Toronto as 135 stocks declined and 106 advanced.

The Bovespa index rose 192 or 0.4 percent, to 49,734.1 at 3:58 p.m. New York time. Of 66 stocks in the Bovspa Index, 42 stocks rise and 24 lost value.

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.

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 FTSE 100 ended 57 points higher at 4,959.6, bouncing back after a dreadful performance in September.

TradingEconomics.com, Bloomberg.com
10/1/2008 1:15:49 PM