U.S. Stocks Drop

U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's $700 billion bank bailout plan won't be enough to stimulate growth.

Caterpillar Inc., Alcoa Inc. and Deere & Co. tumbled more than 5 percent as three-month bank lending rates climbed to the highest since January, while the government said factory orders slumped more than forecast. General Electric Co. sank as much as 10 percent after selling $12.2 billion in shares at a discount. Monsanto Co. slid as much as 21 percent, its steepest intraday loss since going public in 2000, after Merrill Lynch & Co. said slumping demand will hurt farm companies.

The Standard & Poor's 500 Index slid 27.03, or 2.3 percent, to 1,134.03 at 12:04 p.m. in New York. The Dow Jones Industrial Average lost 210.03, or 1.9 percent, to 10,621.04. The Nasdaq Composite Index slipped 2.5 percent to 2,018.14. Eight stocks retreated for each that rose on the New York Stock Exchange.

Canadian stocks fell a second day, pulled down by a record drop in raw-materials shares, on concern that tighter credit, rising unemployment and declining house prices will topple the U.S. economy into a recession. The Standard & Poor's/TSX Composite Index fell 4.4 percent to 11,198.45 at 12:08 p.m. in Toronto. Canada's main equity benchmark slipped 0.3 percent yesterday and fell 15 percent in September as declining commodity prices dragged down the raw- materials and energy producers that account for more than two- fifths of the S&P/TSX's value.

Brazilian stocks fell for the first time in three days, led by retailers, after commodity prices slid and Citigroup Inc. advised investors to sell consumer shares on concern the credit crisis will make it difficult to borrow money. The Bovespa index dropped 1,940.49, or 3.9 percent, to 47,858.16 at 10:23 a.m. New York time.

The rally on London equity markets was erased on Thursday, as optimism about the political prospects of the US government’s $700bn rescue package waned. The FTSE 100 closed 89.3 points lower at 4,870.3 in afternoon trade after briefly spending time back over the 5,000 mark.

Asian stocks fell, led by automakers and commodity producers, after U.S. car sales plunged the most in 17 years and the Senate's approval of a $700 billion rescue package failed to ease concern the global slowdown will worsen.

The MSCI Asia Pacific Index dropped 1.4 percent to 107.47 as of 7:22 p.m. in Tokyo, taking this year's decline to 32 percent. Markets in Malaysia, Indonesia, India and Pakistan are shut for holidays today, while China is closed all week.

Japan's Nikkei 225 Stock Average declined 1.9 percent to 11,154.76. Komatsu Ltd. and Hitachi Construction Machinery Co., Asia's two largest excavator makers, led declines after U.S. manufacturing contracted more than forecast, stoking concern demand for their products may slow.

TradingEconomics.com, Bloomberg
10/2/2008 10:32:26 AM