U.S. Stocks Drop

U.S. stocks declined for the second time this week after initial jobless claims jumped to a 26-year high and the nation’s trade deficit unexpectedly widened following a third consecutive decrease in exports.

Bank of America Corp. and General Electric Co. slumped more than 3.7 percent after the government said 573,000 people applied for first-time unemployment benefits last week and the trade gap grew 1.1 percent in October. General Motors Corp. and Ford Motor Co. declined at least 5 percent as the White House and Democrats raced to convince Senate Republicans to support a rescue of the auto industry.

The Standard & Poor’s 500 Index retreated 0.4 percent to 896.05 at 10:10 a.m. in New York, with financial and consumer shares posting the steepest declines among 10 industries. The Dow Jones Industrial Average lost 46.67 points, or 0.5 percent, to 8,714.75. The Russell 2000 Index of small companies decreased 1.1 percent to 471.09.

European stocks dropped for the first time in four days, led by commodity producers and consumer companies, on concern the economic slowdown is deepening from China to Switzerland and the U.S.

BHP Billiton Ltd. and Anglo American Plc slipped more than 2 percent after Goldman Sachs Group Inc. cut its growth forecast for China. GlaxoSmithKline Plc, the world’s second-biggest drugmaker, and Daimler AG led declines among companies that make more than a fifth of their sales in the U.S. as the dollar weakened against the pound and the euro.

The Dow Jones Stoxx 600 Index retreated 1.6 percent to 202.03 at 2:35 p.m. in London. The measure has slumped 45 percent this year as policy makers and governments worldwide introduced measures to cushion economies from the worst financial crisis since the Great Depression.

Asian stocks rose, driving the region’s benchmark index to a fifth day of gains, as the U.S. moved closer to a $14 billion rescue of American car companies and South Korea cut interest rates to a record low.

The MSCI Asia Pacific Index advanced 1.6 percent to 87.78 as of 7:29 p.m. in Tokyo, capping a five-day, 10 percent gain. The index has rallied 17 percent since reaching a five-year low on Nov. 20 as governments from Australia to South Korea took steps to protect their economies from the financial crisis.

Japan’s Nikkei 225 Stock Average gained 0.7 percent to 8,720.55, paced by Honda. Australia’s S&P/ASX 200 Index fell 1.2 percent, led by Woolworths Ltd., after the jobless rate rose to the highest level in a year.

TradingEconomics.com, Bloomberg.com
12/11/2008 7:23:57 AM