U.S. Stocks Drop

U.S. stocks fell, wiping out last week’s gains, after reports showed the manufacturing slump is worsening and analysts said the shrinking economy will hurt earnings at companies from Apple Inc. to JPMorgan Chase & Co.

Apple slid 3.9 percent after the maker of iPods was downgraded to neutral” at Goldman Sachs Group Inc., while JPMorgan Chase & Co. dropped 5.8 percent on Merrill Lynch & Co.’s prediction that the biggest U.S. bank by assets may post a quarterly loss. Hewlett-Packard Co. and General Electric Co. lost more than 1.2 percent as industrial production fell for the third time in four months and the New York Federal Reserve’s regional economic index contracted the most on record.

The Standard & Poor’s 500 Index slipped 0.9 percent to 871.6 at 10:10 a.m. in New York. Financial and technology shares were the biggest drag on the gauge. The Dow Jones Industrial Average declined 64.27 points, or 0.7 percent, to 8,565.41. The Russell 2000 Index of small U.S. companies decreased 1.4 percent to 462.11.

European stocks gained for the first time in three days after President George W. Bush signaled a decision on rescuing American carmakers would be swift, while a rally in oil prices lifted energy companies.

The Dow Jones Stoxx 600 Index added 0.4 percent to 198.96 at 2:38 p.m. in London, taking its rebound from a five-year low on Nov. 21 to 9.2 percent as governments and policy makers around the world announced packages to revive economic growth. U.S. President-elect Barack Obama said he is planning the most extensive public-works spending package since the 1950s.

The Stoxx 600 is still down 45 percent in 2008 as almost $1 trillion in bank losses and writedowns froze credit markets and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

National benchmark indexes gained in 14 of the 18 western European markets today. The U.K.’s FTSE 100 advanced 0.8 percent, while France’s CAC 40 added 1 percent. Germany’s DAX increased 1.6 percent.

The MSCI Asia Pacific Index climbed 4.1 percent to 87.81 as of 7:25 p.m. in Tokyo. Almost eight stocks gained for each that declined, with all industry groups advancing. The MSCI index has rebounded 17 percent since falling to a five-year low on Oct. 27 as governments from Australia to the U.S. took steps to revive their economies.

Japan’s Nikkei 225 Stock Average added 5.2 percent to 8,664.66, paring its annual loss to 43 percent. Today’s advance was led by Denso Corp. and Aisin Seiki Co., the Japanese auto parts suppliers that sell the most to Detroit carmakers, according to UBS AG.

China’s stocks lagged the region’s gains after industrial production grew at the weakest pace since Bloomberg began tracking the data in 1999 and money supply expanded at the slowest rate in more than three years. Pakistan’s Karachi 100 Index lost 4 percent after the regulator eased trading limits imposed on Aug. 27.

TradingEconomics.com, Bloomberg
12/15/2008 7:22:57 AM