Dow Plunges 500 Points Amid Economic Angst

Corporate Profit Forecasts, Falling Oil Prices Signal Fears That Economic Crisis Is Widening

(CBS/ AP)  Wall Street tumbled again Wednesday as investors worried that the global economy is poised to weaken even as parts of the credit market slowly show signs of recovery. The major indexes fell more than 4 percent, including the Dow Jones industrial average, which fell 515 points.

Corporate profit forecasts, a jump in the dollar and falling oil prices signaled investor fears that an economic slowdown will sweep the globe even if lending begins to approach more normal levels.

The dollar hit multiyear highs against several other major currencies, weighing on commodity prices. That hurt raw materials and energy companies, while giving a boost to airlines. Technology shares fared better than the broader market following quarterly reports from Apple Inc. and Yahoo Inc.

While reduced strains in global credit markets have eased some investors' nervousness about the economy, market anxiety remains as hundreds of companies this week report third-quarter results and issue somewhat murky forecasts that are stirring unease about the economic bumps that may lay ahead.

"In the outlook they are describing to us, things don't look well and they are already announcing that they are laying people off," Art Cashin of UBS Securities told CBS News correspondent Anthony Mason.

Wachovia Corp., which is being bought by Wells Fargo & Co., reported that it swung to a huge loss in the third quarter while the drugmaker Merck & Co. said its quarterly profit fell 28 percent and that it would cut more than 10 percent of its work force.

John Thornton, co-portfolio manager at Stephens Investment Management Group LLC in Houston, said investors' fear has shifted from the immediate concerns about tightness in credit and the resulting difficulty in borrowing to the broader economy as companies come out with their quarterly numbers.

"Even if it weren't for the credit crisis we'd probably be looking toward a pretty tough recession anyway," he said. "The third-quarter earnings are kind of uninspiring but third quarter hasn't been the real concern of people. I think the concern is the depth and duration of the downturn and the effect it's going to have on earnings."

Mason reports that the unemployment rate, now just above 6 percent, could be headed to 7.5 percent, according to a forecast by J.P. Morgan Chase.

"We're looking at a recession which we believe will give us the weakest consumer spending numbers in the post-World War II era," said Bruce Kasman, chief economist at J.P. Morgan Chase.

Americans are already cutting back on gas, reports Mason. Demand over the past month was down more than 4 percent while crude prices continue to plummet, falling more than 50 percent in just three months - from $147 a barrel in July to $66 today, the lowest in 16 months.

According to preliminary calculations, the Dow fell 514.45, or 5.69 percent, to 8,519.21, after being down as much as 698 points in the final half hour of trading. On Tuesday, the Dow retreated 231 points after forecasts from DuPont Co., Sun Microsystems Inc. and Texas Instruments Inc. raised fears about the economy.

Broader stock indicators also fell Wednesday. The Standard & Poor's 500 index fell 58.27, or 6.10 percent, to 896.78, and the Nasdaq composite index fell 80.93, or 4.77 percent, to 1,615.75.

World leaders will gather in Washington on Nov. 15 to discuss the meltdown. Topping the agenda will be a discussion of the underlying causes of the financial crisis and what actions are needed to be taken to keep it from happening again, reports CBS News White House correspondent Mark Knoller.

A senior administration official said Wednesday that the forum will be the first in a series of international meetings to discuss what economists predict could be a long and deep downturn.

For many U.S. companies, the damage has already begun.

Airplane maker Boeing reported its earnings slumped 38 percent as a strike halted production of commercial jets.

Merck & Co. said it will slash 7,200 jobs as part of a new restructuring program. The drugmaker's third-quarter profit plunged 28 percent, partly due to flat sales. Earnings also fell at paper company Kimberly-Clark Corp., insurer WellPoint Inc. and drug developer Wyeth.

"We are going into what is very clearly a recession mode," Blake Jorgensen, Yahoo's chief financial officer, said in a Tuesday interview. Yahoo is slashing 1,500 jobs while it braces for a deep downturn likely to extend well into 2009.

[txgrouch2007]

rhs648 said, "You fail to mention Chris Dodd and Barney Franks for failing to carry out their duties. Americans must realize that both Republicans and Democrats failed us."

YES, this is absolutely correct.

Anyone who continues to defend the Democrats is a TRAITOR and an ENEMY OF THE NATION.

If you defend the Democrats, you are supporting half of the enemy.

[txgrouch2007]

Banks were DEREGULATED by the Gramm/Leahy/Bliley Act of 1999, which was co-authored by PHIL GRAMM.
Posted by perk235 at 04:21 AM : Oct 23, 2008

And which was approved OVERWHELMINGLY by BOTH parties in the House.

It was SIGNED INTO LAW by Bill Clinton - THERE''S NO SUCH THING AS VETO PROOF.

Democrats opposed stronger reglation of Fannie Mae and Freddie Mac, led by Barney Frank.

BOTH SIDES ARE TO BLAME.

[wherenextnow]

"The bailout has covered those 7% of mortgages ten times over!"
Posted by perk235 at 04:21 AM : Oct 23, 2008

So then it''''s all psychological, nothing but a bunch of whinners who can''''t get a grip.

Posted by Grandesign at 05:31 AM : Oct 23, 2008
------

I know. Republican Socialists begging for Bailouts to nationalize banks need to get a grip.

[grandesign]

"The bailout has covered those 7% of mortgages ten times over!"
Posted by perk235 at 04:21 AM : Oct 23, 2008

So then it''s all psychological, nothing but a bunch of whinners who can''t get a grip.

[perk235]

Banks were DEREGULATED by the Gramm/Leahy/Bliley Act of 1999, which was co-authored by PHIL GRAMM.

Derivatives (credit default swaps) were DEREGULATED by the Commodities Modernization Act of 2000, also co-authored by PHIL GRAMM.

DERIVATIVES (CREDIT DEFAULT SWAPS) CAUSED THE MELTDOWN. Do you think the world would be reeling over 7% of US mortgages in foreclosure? The bailout has covered those 7% of mortgages ten times over!

[rhs648]

The millions of average American homeowners faced with foreclosure are still in trouble-- they must beg for mercy from the very banks which just received a freight train load of taxpayer dollars!

We can agree banks must survive, but where are the innovative proposals banks like to offer when times are good? Where is their willingness, in gratitude to taxpayers, to renegotiate terms with their borrowers, on whom everything depends?

Predictably, McBush has a plan that gives still more to the very banks whose greed, in part, led to the Wall Street meltdown. His solution to the mortgage meltdown is to pay these banks for their distressed assets at face (non-market) value and take over the mortgages! No "tough love" from this Republican for the banks, no "market discipline" free market evangelists like to preach-- no, with the McBush measure, bankers don''''t lose a dime, thanks to generous taxpayers whose own investments have been plundered by the same banks!...

Posted by alphaa01000

You fail to mention that President Bush had help from Congress, the very group that failed to provide oversight and allowed this mess to happen. You fail to
mention Chris Dodd and Barney Franks for failing to carry out their duties. Americans must realize that both Republicans and Democrats failed us.

[dsr57]

I don''''t think that a lot of middle aged people understand what''''s going on - you''''ll never m,ake your money back before you retire, not even mentioning any interest that the money in your retirement account would have made over the years that it will take someone to fix the economy after republicans screwed it up. McCain is talking about having the same economic policy as bush - you can see where that;s gotten us. It''''s time to vote the GOP out of office.

Posted by Strangeworld

----------------------------------------------------

Wow, you.........are...........dumb.



Now is the best time to up you 401k contributions and snatch up everything while it%u2019s cheap. It%u2019s people like you that spread fear and cause some people to make the worst decisions of their lives by taking their retirement out and hiding it under their mattresses.

[strangeworld]

The republicans in Washington won''t even admit that we''re in a recession because they''re afraid that the American voter will rightly hold them accountable for their poor economic policy. The GOP is truly the party of the corrupt - they couldn''t tell the truth to save their soul.

[strangeworld]

I don''t think that a lot of middle aged people understand what''s going on - you''ll never m,ake your money back before you retire, not even mentioning any interest that the money in your retirement account would have made over the years that it will take someone to fix the economy after republicans screwed it up. McCain is talking about having the same economic policy as bush - you can see where that;s gotten us. It''s time to vote the GOP out of office.

[bs5313]

Think about it, 300 million of us in America and we want to choose between these two guys for president. Who APPROVE MESSAGES ABOUT EACH OTHER, because they worry to much about each other and not about us. The popular vote means nothing, the Electorial College is going to pick it for us anyway. Step back take a breath, its a good time to buy into America, to reinvest in ourselves. Just take it slow and steady and the only message we need to approve of is our own.

[nothappyatall]

My family has sold the house and we have taken all our money out.
Posted by wntrpls

WHich on''t do you a dam bit of good if the dollar collapses like the Deutch mark did in Germany in the 40''s. 1,000,000 DM was a lot of money, a fortune one morning, by that afternoon it devalued so rapidly that a woman''s HAT in a store window was priced at $1,000,000 DM. A wheelbarrow full of DM is what it took to buy anything due toinflation.
Ref: autobiography- "My life with boxers" Freiderun Stockmann.

The US dollar has lost 1/3rd it''s value,
when the US dollar takes 100 of them to buy a pack of gum you''ll see what the cash from the house sale will buy- better hand on to the HOUSE not cash!

[strangeworld]

The republican party supports "Joe the CEO" above all else. They have grown a national debt that will be a yoke around the necks of working people and their children for decades. 97% of big-business in the US pays no taxes at all. A working man voting for a republican is like a chicken voting for Colonel Sanders.

[BeyondGreen]

As our country sinks deeper and deeper into financial crisis little is being said about the direct link of our dependence on foreign oil. The exorbitant cost of fuel has strained every aspect of our economy. It doesn''t stop at filling up the family vehicles to get back and forth to work and tend to the necessities, as if that were not enough of a sucker punch to our budgets. Utility bills have also seen record rate hikes to cover their increased production costs. Every consumer product has seen sharp rises in both production and shipping costs that are readily passed on to us. There is little to no money left over for savings or investing. Jobs and homes are being lost at a record high rate. .We have many natural resources of energy that could be easily tapped such as wind, solar and wave. We also have many advanced technological resources available such as hybrid cars; plug in cars, and alternative fuels. There is obviously no easy and fast solution but we need to be proactive as a nation to devise a plan to incorporate all that is available to us to get ourselves out from under the iron grip of our dependence on foreign oil. We act dumbfounded as we are swept up in our economy as it goes down the tubes. We are a nation with the resources we need to end this but we are a nation without a plan.I just purchased a newly released book by Jeff Wilson called "The Manhattan Project of 2009." Should be a required read for congress!

[strangeworld]

If the GOP and big-business were actually going to create US jobs when the tax rate was low, they would have done it. Modern republicans put greed and corruption above all else...they''re the worst that the USA has to offer.

[strangeworld]

All that''s going on with the market is a meltdown caused by the failed economic policy of the republican party. As a rule of thumb, the GOP only cares about the wealthy of the country, as is evident by their continued pushing of tax cuts for the rich - even when faced with overwhelming evidence that big-business is not investing the money into America or jobs, but taking it to other countries. America looked pretty strong in the late 1950''s when we had a tiop tax rate of over 90%...right now we''ve got a top tax rate of 35% and our country is circling the bowl. Republicans no longer want to do what''s best for the country (witness a previous comment about tax evasion), instead the GOp follows a mantra of greed that has done nothing but harm to the US.

[wntrpls]

My family has sold the house and we have taken all our money out. My dads consulting business is going back to an all cash business(so Obama doesnt take our money), tax evasion will be the new Hot Fad if Obama wins.

[wntrpls]

Obama is going to make Jimmy Carter look like a conservative. Everybody is pulling there money out in response to Obama possibility of winning. If McCain wins watch the Stock Market Rally.

[wntrpls]

People are getting ready for the Obama Nation. With his tax plans , nobody is going to want to invest there money in the Stock Market. Obama is geared to win and Wall Street knows it. No amount of Bail out will save us from Obama.

[strangeworld]

If republican "trickle down" economics worked, we wouldn''t be having this conversation now. The forum republicans are either mentally constipated, or believe that the rest of us are - come on now, there''s nothing more to talk about here, republican economics has ruined our economy yet again, just as it has every time that it''s been implemented. The great depression was caused by republican greed and "trickle down" economics. There is not one example of "trickle down" economics benefiting the US in the long term, yet the GOP keeps pushing it because republican campaign donors are larely the wealthy people who benefit from the GOP''s plan to take money away from the middle class and put it in the hands of the wealthy.

[standlee5]

Obama''s made it clear to business he wants to tax them and he wants to tax them big. I don''t think the markets like Obamunism.