U.S. Stocks Fall

U.S. stocks declined the most in a week after lawmakers said a $14 billion plan to rescue the nation’s auto industry lacks the votes to pass the Senate and initial jobless claims jumped to a 26-year high.

General Motors Corp. and Ford Motor Co. slid more than 10 percent. Bank of America Corp. slumped 11 percent and General Electric Co. tumbled 5.3 percent on government reports that 573,000 people applied for first-time unemployment benefits last week and the trade deficit grew 1.1 percent as exports decreased. Ciena Corp. plunged 20 percent, its steepest drop in three months, after the network-equipment maker posted a fourth- quarter loss.

The Standard & Poor’s 500 Index fell 2.9 percent to 873.58, with financial shares decreasing 8.5 percent as a group for the biggest decline among 10 industries. The Dow Jones Industrial Average dropped 196.33 points, or 2.2 percent, to 8,565.09. The Russell 2000 Index of small companies lost 5.3 percent.

European stocks dropped for the first time in four days on concern the economic slowdown is deepening from China to Germany and the U.S.

Daimler AG sank 3 percent, pacing declines among companies that make more than a fifth of their sales in North America after the dollar weakened and jobless claims jumped to a 26-year high. SAP AG retreated for a second day as Germany’s Ifo institute said its economy will shrink 2.2 percent next year. Ericsson AB, the world’s largest maker of wireless networks, slipped 5.7 percent after Merrill Lynch & Co. lowered its recommendation on the shares to underperform.”

The Dow Jones Stoxx 600 Index retreated 0.8 percent to 203.79, having dropped 44 percent this year as policy makers and governments worldwide introduce measures to cushion economies from the worst financial crisis since the Great Depression.

National benchmark indexes fell in 14 of the 18 western European markets. The U.K.’s FTSE 100 added 0.5 percent as oil companies including BP Plc rallied. France’s CAC 40 lost 0.4 percent as European Aeronautic, Defence & Space Co. decreased, while Germany’s DAX slipped 0.8 percent.

TradingEconomics.com, Bloomberg
12/11/2008 1:16:35 PM