Stock Price DOWN!

Bad Economic News Sends Stocks Plummeting

 

U.S. stocks plunged today as investors locked in profits from yesterday's rally and digested more bad economic news.

With the presidential election settled, investors appear to have returned their focus to the economic turmoil that has weighed down the market and is now facing President-elect Barack Obama.

The Dow Jones industrial average was down more than 3 percent, or 304 points just before 1 p.m. The Standard & Poor's 500-stock index was down 3.3 percent, or 33 points. The tech-heavy Nasdaq composite index was down 3.4 percent, or 60 points.

Among the issues facing Obama will be rising unemployment rates. In a precursor to a government unemployment report scheduled to be released Friday, private employment fell 157,000 from September to October on a seasonally adjusted basis, according to the ADP National Employment Report released today. That included a decline of 31,000 in the service-providing sector, the first decline in that sector since November 2002.

The Institute for Supply Management said today that its service sector index fell to 44.4 in October from 50.2 in September. That was a bigger drop than expected for the service sector, which includes hotels and retailers.

Meanwhile, investors are also continuing to digest a series of mixed earnings reports.

GMAC Financial Services, which is owned by Capital Management and General Motors, reported a $2.52 billion third-quarter loss, compared with a loss of $1.6 billion during the same period last year. The company blamed most of the losses on its troubled mortgage business but said its auto financial business was also under pressure. The company has been holding discussions with government officials to get federal assistance.

"The economic and market conditions created an unrelenting environment for our business and the financial services sector overall," GMAC chief executive Alvaro G. de Molina said in a statement. "In this climate, our primary objective is to make prudent use of our resources and take the steps needed to address the reduced access to liquidity."

Time Warner reported better-than-expected third-quarter profits, beating analysts' expectations. But advertising revenue at the AOL unit fell, which the company blamed on a slump in online display advertising. Time Warner, a media conglomerate, lowered its earnings forecast for the year.

Cisco is scheduled to report results after the markets close.

Overseas markets were mixed. Japan's Nikkei was up 4.5 percent. But the FTSE in London and German's Dax were both down about 2 percent.

Crude oil prices fell 3 percent to $68 a barrel.