February 11, 2009 4:29 PM
- Text
Dow Takes A Nosedive
(CBS/AP)
Wall Street pulled back sharply Tuesday as investors dealt with disappointing earnings reports and rising concerns about the mortgage market. The Dow Jones industrials fell more than 200 points.
DuPont Co. was the Dow's biggest loser after the chemical maker reported flat second-quarter profit, as improving sales abroad balanced the ongoing weakness in the U.S. housing and automotive markets. Fellow Dow component American Express Co. said late Monday its quarterly profit climbed 12 percent on record card member spending. However, the nation's third-largest credit card brand said cardholders are also shirking more payments.
Even with this slide, the Dow is still up 10 percent for the year, reports CBS News correspondent Anthony Mason.
Tuesday's retreat was not surprising, given that the market's recent move into record territory above 14,000 came before companies began reporting quarterly results in earnest. Many investors bet that results would be better than has been the case. A profit warning from mortgage lender Countrywide Financial Corp. Tuesday also reminded investors that troubles in the subprime market persist.
The across-the-board sell off was ignited when Countrywide, the largest U.S. mortgage lender, said delinquencies on subprime loans had hit 24 percent and delinquencies on the highest quality "prime loans" had more than doubled to 4.6 percent.
Countrywide's CEO said that he now expects the housing slump to last at least until 2009, reports Mason.
The Dow gave up 226.47, or 1.62 percent, closing at 13,716.95. The drop was the average's biggest since March 13, when the Dow tumbled 242 points, also amid concerns that the subprime woes could infect the broader lending industry.
Twenty-nine of the 30 Dow components fell; only Verizon Communications Inc. notched a modest gain.
Other major stock indicators also suffered steep declines. The Standard & Poor's 500 index shed 30.53, or 1.98 percent, to 1,511.04. The Nasdaq composite index lost 50.72, or 1.89 percent,closing at 2,639.86.
Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 4.06 billion shares, compared with 3.09 billion shares on Monday.
Following the Dow's move last week over 14,000 for the first time, it "seems logically like the market needs to have some profit-taking," said Joe Ranieri, managing director of U.S. equity trading at Canaccord Adams.
One veteran trader said Wall Street was having a heart attack.
"You can have a mild heart attack," UBS' Arthur Cashin told Mason. "I mean down 200 points on close to 2 billion shares is certainly an event."
The stock market will likely be driven again by company earnings reports over the next two weeks, he said, as investors try to get a sense of how well corporate profits will hold up in the second half of the year.
Tuesday's decline kept up a pattern of back-and-forth finishes. For the sixth straight session, the market has risen one day and fallen the next.
The shifts may have seemed sharp at times. But Todd Leone, managing director of equity trading at Cowen & Co. noted that, as a percentage of the whole, 100-point swings in the Dow don't register the way they used to, when the index traded at less than 10,000.
"I think we're in a range here," he said. "The market doesn't know what it's looking for."
DuPont Co. was the Dow's biggest loser after the chemical maker reported flat second-quarter profit, as improving sales abroad balanced the ongoing weakness in the U.S. housing and automotive markets. Fellow Dow component American Express Co. said late Monday its quarterly profit climbed 12 percent on record card member spending. However, the nation's third-largest credit card brand said cardholders are also shirking more payments.
Even with this slide, the Dow is still up 10 percent for the year, reports CBS News correspondent Anthony Mason.
Tuesday's retreat was not surprising, given that the market's recent move into record territory above 14,000 came before companies began reporting quarterly results in earnest. Many investors bet that results would be better than has been the case. A profit warning from mortgage lender Countrywide Financial Corp. Tuesday also reminded investors that troubles in the subprime market persist.
The across-the-board sell off was ignited when Countrywide, the largest U.S. mortgage lender, said delinquencies on subprime loans had hit 24 percent and delinquencies on the highest quality "prime loans" had more than doubled to 4.6 percent.
Countrywide's CEO said that he now expects the housing slump to last at least until 2009, reports Mason.
The Dow gave up 226.47, or 1.62 percent, closing at 13,716.95. The drop was the average's biggest since March 13, when the Dow tumbled 242 points, also amid concerns that the subprime woes could infect the broader lending industry.
Twenty-nine of the 30 Dow components fell; only Verizon Communications Inc. notched a modest gain.
Other major stock indicators also suffered steep declines. The Standard & Poor's 500 index shed 30.53, or 1.98 percent, to 1,511.04. The Nasdaq composite index lost 50.72, or 1.89 percent,closing at 2,639.86.
Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 4.06 billion shares, compared with 3.09 billion shares on Monday.
Following the Dow's move last week over 14,000 for the first time, it "seems logically like the market needs to have some profit-taking," said Joe Ranieri, managing director of U.S. equity trading at Canaccord Adams.
One veteran trader said Wall Street was having a heart attack.
"You can have a mild heart attack," UBS' Arthur Cashin told Mason. "I mean down 200 points on close to 2 billion shares is certainly an event."
The stock market will likely be driven again by company earnings reports over the next two weeks, he said, as investors try to get a sense of how well corporate profits will hold up in the second half of the year.
Tuesday's decline kept up a pattern of back-and-forth finishes. For the sixth straight session, the market has risen one day and fallen the next.
The shifts may have seemed sharp at times. But Todd Leone, managing director of equity trading at Cowen & Co. noted that, as a percentage of the whole, 100-point swings in the Dow don't register the way they used to, when the index traded at less than 10,000.
"I think we're in a range here," he said. "The market doesn't know what it's looking for."
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