Investor Fears Drive Down Stocks
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Stocks tumbled sharply on Wall Street Thursday as numerous worrisome economic indicators shook the confidence of investors.
From inflation concerns to the housing market meltdown to a surge in jobless claims, the barrage of bad economic news sent the Dow Jones down 121 points, or 0.9 percent, to 13110, while the Nasdaq fell 26 points, or 1.0 percent, to 26.19. The index faring worst of all was the S&P 500, which dropped 19 points, or 1.3 percent, to 1451.
Preliminary data from the U.S. Department of Labor showed a 0.3 percent increase in the consumer price index for October, highlighted by a 1.4 percent jump in energy prices. For investors the specter of creeping inflation raises the fear that the Federal Reserve will refrain from cutting interest rates in December, possibly stalling economic growth.
A report from Wells Fargo characterized the current housing market as the worst since the Depression of the 1930s. And economists at the Federal Reserve Bank of Dallas on Thursday said they saw no end in sight to the housing-market slump and that foreclosures could increase indefinitely.
While most tech stocks lost ground Thursday, big losers were rare. Among them was Research in Motion, Ltd. The BlackBerry makers shares slid $6.94, or 6.3 percent, to $103.01. RIMM is down 23 percent since peaking at $133.03 on Nov. 7, after several analysts raised their price targets for RIMM shares, triggering more than a week of heavier-than-usual trading.
Chip maker Intel Corp. slipped 32 cents, or 1.2 percent, to $25.53, after the company announced on Thursday that its board of directors had approved a 13 percent increase in the quarterly cash dividend to 12.75 cents per share.
Microsoft shares fell 18 cents, or 0.5 percent, to $33.75 after mobile software applications vendor Openwave announced it would sell its Musiwave unit to Redmond for $46 million in cash and the assumption of $4 million in debt. Openwave gained 13 cents, or 4.4 percent, to $3.07, though shares have been falling steadily since reaching $10.58 in early June.
Online financial services provider e*Trades dead-cat bounced lasted two days as shares dipped 8 cents, or 1.4 percent, to $5.46 in Thursdays session. ETFC gained on Tuesday and Wednesday after shares plunged Monday amid rumors of bankruptcy following the companys profit warning.
Database vendor Oracle was one of the few techs to finish in the black on Thursday, as shares rose 24 cents, or $1.19, to $20.42. Wall Street investment firm Bear Stearns & Co. reiterated its outperform rating for ORCL and maintained its $26 share price target.