Stocks Fall in Early Trading After Gloomy Reports

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	DJIA 8,925.41  -385.58    NASDAQ 1,715.36  -63.65    SPX 948.93  -49.08    S  3.68 -0.36    LMT  91.70 -4.07    FNM  1.02 -0.08    DJIA 8,925.41  -385.58    NASDAQ 1,715.36  -63.65    SPX 948.93  -49.08    S  3.68 -0.36    LMT  91.70 -4.07    FNM  1.02 -0.08

Personalize Ticker | Updated 11:22 AM, 10/15/2008	Disclaimer | © MarketWatch Inc. Source: Interactive Data Corp

Stocks fell in early trading today on gloomy economic data and earnings reports that reflected the impact of the financial crisis on corporate balance sheets.

The Dow Jones industrial average was down 3.7 percent, or 342 points, shortly after 10:45 a.m. The Standard & Poor's 500-stock index was off 4.4 percent, and tech-heavy Nasdaq was down 2.9 percent.

An unexpectedly bleak consumer spending report from the Commerce Department during the back-to-school shopping season reinforced fears that the country is slipping into a recession. Consumer spending makes up two-thirds of economic activity.

Retail sales were down 1.2 percent in September, the steepest monthly decline in three years, according to the Commerce Department.

"In the absence of government stimulus checks, the consumer capitulated in September," said Joseph Brusuelas, chief economist for Merk Investments. "Moreover, this is a crystal clear signal that the holiday season ahead is shaping up as the worst since the early 1980s."

The temporary surge in consumer spending last summer on tax rebate checks has come to an abrupt end, Michael Woolfolk, senior currency strategist for the Bank of New York Mellon, said in a research note this morning. "Recessionary conditions in [the third quarter] appear all but guaranteed," he said.

Also, wholesale prices fell 0.4 percent in September, according to the Labor Department. But excluding food and energy, core wholesale prices rose by 0.4 percent.

Meanwhile, three banks, J.P. Morgan Chase, Wells Fargo and State Street, reported better than expected earnings today but still showed the damage of the financial crisis. All three are among the nine banks the Treasury Department says will share $125 billion in taxpayer money as part of a program to stabilize the financial system.

J.P. Morgan saw its net income tumble 84 percent to $527 million during the third quarter, but it still managed to beat analysts' forecasts of losses nearing $1 billion. The bank had to devalue mortgage-related investments by $3.6 billion during the quarter.

Wells Fargo recorded net income of $1.64 billion, down nearly 25 percent compared with last year. State Street reported net income of $477 million, up from $358 million.

Wells Fargo and J.P. Morgan were up about 1.5 percent in morning trading, while State Street fell 10 percent.

Crude oil prices continues their three-month decline today, falling 3.85 percent, or $3, to $75.60 a barrel.