YAHOO [BRIEFING.COM] : A
sell-off in the final hour of trading sent stocks tumbling Thursday. Late,
sharp moves have become the norm during recent sessions, feeding volatility.
This was the fourth session
this week that the stock market swung by more than 2.5% in either direction.
Such wide and unpredictable
swings have had investors pursuing the safety of government securities. That
has pushed the yield on the 3-month Bill to just 0.01%. The yield on the
10-year Note fell as low as 2.54% during the session, while the yield on the
30-Year Bond fell to 3.07%. Treasuries haven't seen such low yields in decades.
Stocks were shunned almost
entirely across the board.
Helped by retailers (+1.5%),
only the consumer discretionary sector finished in higher ground (+0.3%).
Retailers showed strength despite flagging November same-store sales results. Target (TGT 34.04, -0.44) reported a 10% drop in
comparables, Macy's (M 7.83, +0.44) saw a 13% slump in same-store sales, and Kohl's (KSS 34.32, +0.95) experienced a near 18%
drop in comparables. On the other hand, Wal-Mart (WMT 55.11, +0.73) posted an enviable 3%
increase in comparables.
Energy suffered the steepest
decline among the major economic sectors. It dropped 6.2% as oil also fell as
much as 7.3% to trade as low as $43.36 per barrel. It has been nearly four
years since oil futures traded so low. The commodity is now 70% off its
all-time high.
Oil's retreat has been driven
by reduced demand, reflecting slower economic growth. Slower growth also has
many widely held companies issuing disappointing outlooks.
More specifically, Dow
component Merck (MRK 25.00, -1.46) issued downside guidance for 2009, overshadowing
an in-line estimate for the current fiscal year.
Likewise, fellow Dow component
DuPont
(DD 23.69, +0.08)
forecast a fourth quarter loss and issued downside guidance for fiscal 2009.
The company also plans to cut around 2,500 jobs and trim capital spending in
2009. AT&T (T
28.17, -0.91), another Dow component, announced plans to cut 12,000 employees,
and will also trim capital expenditures.
The planned job cuts reflect
the weak labor market. Initial claims for the week ended Nov. 29 declined
21,000 to 509,000. Though that was better than the consensus estimate of
540,000 claims, continuing claims jumped 89,000 to 4.09 million. The four-week
moving average for initial claims jumped slightly to 524,500, while the
four-week moving average for continuing claims increased to 4.00 million from
3.94 million.
As a side note, the Department
of Labor will issue official November unemployment data ahead of tomorrow's
opening bell.
Automakers are back in front
of Congress to continue making their case for government financing. Ford (F 2.66, -0.19), General Motors (GM 4.11, -0.79), and Chrysler are all
testifying, providing plans for the use of the proposed funds, and also
attempting to convey the implications of a failed government-led
bailout.
With global economic
conditions weakening, the Bank of England cut its target lending rate by 100
basis points to 2.00%. The European Central Bank cut its interest rate target
by 75 basis points to 2.50%. The cuts come as central banks abroad continue
working to stimulate economic growth. The dramatic size of the cuts, however,
comes as a reminder that foreign central banks have been behind the curve.DJ30
-215.45 NASDAQ -46.82 NQ100 -3.3% R2K -3.1% SP400 -3.5% SP500 -25.52 NASDAQ
Adv/Vol/Dec 770/2.07 bln/2003 NYSE Adv/Vol/Dec 814/1.47 bln/2302