U.S. Stocks Retreat on Recession Concern

U.S. stocks fell for a sixth day as unprecedented interest-rate cuts by six central banks failed to convince investors the global economy will avoid a recession.

Alcoa Inc., the largest U.S. aluminum producer, tumbled 14 percent as a reduction in manufacturing caused by the credit crisis left the company with earnings that trailed analyst estimates. J.C. Penney Co. and Target Corp. dropped as much as 7.2 percent after same-store sales slumped in September. Russia, Indonesia, Ukraine and Romania shut their stock exchanges and Brazilian stocks fell to the lowest in two years in the worst week for emerging markets in at least two decades.

The Standard & Poor's 500 Index lost 11.46 points, or 1.15 percent, to 984.77 at 11:36 a.m. in New York. The Dow Jones Industrial Average retreated 137.16, or 1.45 percent, to 9,309.95. The Nasdaq Composite Index decreased 0.32 percent to 1,749.37. Three stocks fell for every two that rose on the New York Stock Exchange.

Canadian stocks fell, as energy producers and banks pushed the market toward a sixth day of declines on concern cuts in borrowing costs by the world's biggest central banks won't avert a global recession. The Standard & Poor's/TSX Composite Index dropped 1.75 percent to 9,658 at 11:35 a.m. in Toronto, after rising as much as 2.1 percent earlier.

Brazilian stocks fell for a fifth day, led by pulp producers and utilities, on concern the weaker real will reduce earnings and interest-rate cuts by six central banks won't prevent the global economy from entering a recession. The Bovespa index slid 1,105.9, or 2.76 percent, to 39,033.95 at 11:36 a.m. New York time.

European equities failed to hold gains inspired by a co-ordinated emergency interest rate cut  from the world’s leading central banks on Wednesday. The FTSE 100 was unable to keep the momentum provided by the action. The benchmark index was 253 points lower at 4,351.82 at the close. Frankfurt’s Xetra Dax shed 6.25 per cent to 4,993.60, the CAC 40 in Paris lost 6.65 per cent to 3,484.12.

Asian stocks tumbled earlier, driving the Nikkei 225 Stock Average to its biggest drop since October 1987, on concern the credit crisis will topple more banks and slowing growth will cut demand for exports. The MSCI Asia Pacific Index fell 7.4 percent to 91.42 as of 7:39 p.m. in Tokyo, the biggest drop since April 2, 1990, and bringing its decline this year to 42 percent. Financial stocks contributed the most to the index's drop.

Japan's Nikkei 225 Stock Average lost 9.4 percent to 9,203.32, the most since global markets crashed in October 1987. Toyota Motor Corp. slumped after Nikkei English News said profit may drop and after the dollar slumped versus the yen.

The Hang Seng tumbled 8.2 percent as Hong Kong's monetary authority cut interest rates in an effort to keep the credit crisis from spreading. Australia's S&P/ASX 200 Index declined 5 percent as consumer confidence fell the most in two years.

Indian stocks fell, with the benchmark Sensitive Index at a two-year low, on concern the credit crisis will topple more banks and slow global growth. The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 366.88, or 3.137 percent.

Russian authorities closed the Micex Stock Exchange for two days as a new $36 billion injection into the banking system by President Dmitry Medvedev failed to halt the country's biggest stock collapse since 1998. The Micex Index plunged for a sixth day, falling 14 percent to 637.87, the lowest level in more than three years, before trading was halted at 11:05 a.m. in Moscow.

TradingEconomics.com, Bloomebrg
10/8/2008 8:59:04 AM