As Auto Bailout Hopes Fade, So Do Stocks

Dow Plunges More Than 400 Points As Prospects Dim For Immediate Lifeline For Automakers

(CBS/AP)  Stocks plunged for a second straight day Thursday, falling to a range not seen in more than five years as financial and energy stocks tumbled while demand for the safety of government debt spiked to historic levels.

Stocks saw the most intense selling late in the session after hopes faded that lawmakers would quickly put together an aid package for U.S. automakers and as the Standard & Poor's 500 index broke through lows established in 2002. That breach of a key technical threshold sent a shudder through the market and touched off further selling.

The Standard & Poor's 500 index fell 6.7 percent to the 752 level, below the closing low of 776.76 logged on Oct. 9, 2002. The Dow Jones industrial average, meanwhile, fell 445 points, or 5.6 percent, to its lowest close since March 2003. The decline brings the Dow's two-day drop to 873 points, or 10.6 percent, its worst two-day percentage loss since October 1987.

Investors seemed unmoved by remarks from Treasury Secretary Henry Paulson who said in a speech Thursday that the financial crisis hitting the global economy was something likely to occur only "once or twice" in a 100 years. He cautioned against overreacting by implementing regulations that are too onerous.

Financial stocks plunged on worries that the government's financial rescue won't be sufficient to cover banks' losses. Meanwhile, a sharp drop in oil prices weighed heavily on energy companies.

Citigroup, which crumbled 26 percent Thursday, was one of the biggest losers, reports CBS News correspondent Anthony Mason. Even after a Saudi prince upped his stake in the financial giant, the stock fell below $5. The total value of Citigroup's outstanding shares is now almost equal to the $25 billion in bailout money the treasury just pumped into the bank.

"I think Citigroup, at these prices they are at now, is shocking to most people," Doreen Mogavero, CEO of Mogavero, Lee & Co., told Mason.

Thursday's pullback came amid heavy volume, a welcome sign for some investors who are looking for the market to experience a cathartic sell-off that could lay the groundwork for a recovery. Heavier volume can signal investors are scared enough to sell rather than simply sitting on the sidelines, which can result in relatively light volume.

Observers said, however, that the selling was just as much to do with entrenched pessimism about the prospects for many corners of the economy.

"Unrelenting gloom has taken over the markets," said Dana Johnson, chief economist at Comerica Inc. "The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market."

"Back in October we were looking at a potential catastrophic meltdown of the credit markets, and that didn't happen," he said. "But that doesn't mean tremendous damage hasn't been done to the economy."

According to preliminary calculations, the Dow fell 444.99, or 5.56 percent, to 7,552.29. It was the Dow's biggest percentage drop since Oct. 22 and its lowest close since March 12, 2003.

Broader stock indicators also showed huge declines. The Standard & Poor's 500 index fell 54.14, or 6.71 percent, to 752.44. The Nasdaq composite index fell 70.30, or 5.07 percent, to 1,316.12.

The Russell 2000 index of smaller companies fell 27.07, or 6.56 percent, to 385.31.

Declining issues outnumbered advancers by about 10 to 1 on the New York Stock Exchange, where volume came to 2.23 billion shares.

Gus Scacco, managing director at AG Asset Management, said investors can't manage to regain confidence as the market continues to plumb new depths. Stocks fell to their lowest level in more than five years on Wednesday.

"We're trying to make a bottom but we keep breaking through," he said.

Jon Biele, head of capital markets at Cowen & Co., said investors are bracing for more bad news.

"The view on the floor is nobody is sure what the next stop is," he said. "I think the market is expecting another shoe to drop."

"Some people think this is the capitulation we've been waiting for," he said. "All along we've been hoping for a real violent sell-off and the end of the day today was a pretty dramatic move."

Bond prices showed stunning advances as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note fell to 3.14 percent from 3.32 percent late Wednesday. Bond yields move opposite their price. The yield on the three-month Treasury bill, considered one of the safest assets around, fell to 0.03 percent from 0.06 percent late Wednesday.

Light, sweet crude for December delivery fell 7 percent, or $4, to settle at $49.62 on the New York Mercantile Exchange.

Overseas, stock markets tumbled, with benchmarks in Tokyo and Seoul losing almost 7 percent each, after recession fears sent Wall Street plunging and Japan suffered its biggest drop in exports in seven years.

Japan's Nikkei stock average fell 6.9 percent, while Hong Kong's Hang Seng Index slid 4.04 percent. Britain's FTSE 100 fell 3.26 percent, Germany's DAX index fell 3.08 percent, and France's CAC-40 fell 3.48 percent.

[lewiston14]

Trust me it wont last. Think Korea or Iran and the next morning its $200. That should finish everything still standing off

[hitoyou1]

Trust me it will go lOWER. To under $50.00 a barrel. Trust me it will.

[shanev137]

In other Nymex trading, gasoline futures fell 1.55 cents to $1.09 a gallon.


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

Wow.

When Bush leaves office, the price of gasoline is going to be the same price as when he took office.

LOL

Gee, thanks for the 8 years of assraping Dub.

[shanev137]

Posted by Hitoyou1 at 06:08 AM : Nov 20, 2008

You''re right, and this article is wrong.

Brent spot is already below $48 a barrel.


http://www.bloomberg.com/energy/

[pirmin3]

Time to get his and hers Hummers.

[BeyondGreen]

And while everyone is doing the happy dance around the pumps OPEC is making plans to cut production again and raise gas prices.Unfortunately lower gas prices aren''t here to stay.

http://money.cnn.com/2008/11/15/news/international/opec.ap/

The gas prices this past year have serioulsy damaged our economy and society. We must get on with becoming energy independent.We can''t take another year like this past. Jeff Wilson has a wonderful new book out about the energy crisis and what it would take for America to become energy independent. It covers every aspect of oil, what it''s uses are besides gasoline, our reserves, our depletion of it. Every type of alternative energy is covered and it''s potential to replace oil. He even has proposed legeslative aganda''s that would be necessary to impliment these changes along with time frames. This book is profoundly informative and our country needs to become more informed and move forward with becoming energy independent. It is called The Manhattan Project of 2009 Energy Independence NOW.

[georgew1956]

WHEN IS OPEC SENDING STIMULUS CHECKS WE SPONSERED THOSE GREEDY SOBS

[perceptions5]

The market is tanking because "business" is looking into the future.

And the only thing they see is Obama, Harry, and Nancy.

A Chicago Gangster, a Las Vegas Mobster,and a San Francisco Snobster.

The economy is the TOP issue right now SO why hasn''t The Emperor Without Clothes, Obama named his candidate to lead the US Treasury?

Of course the this new breed of liberal fascists that run the AP/CBS and the rest of our corrupt liberal MSM wolfpack press aren''t going to run with that theme.

After all Obama is their boy wonder.

It''s going to four years of major pain and suffering.

If you like the past two years that the Democrats have run our economy and Congress then you''re going to love the next four years with the Dems in 100% control.

........Standby....

[shanev137]

These Higher commodity costs

-----------


What higher commodity costs?

The cost of commodities is dropping through the floor dude.

[panhandlpete]

If only we had a crystal ball with our country''s future in it......then maybe our leaders would be able to make good decisions.......not likely, for they probably could not agree on the path to take to reach a goal.

Handing out $770 Billion dollars to anyone, especially members of this current administration, without specific instructions and oversight is more than just a BAD DECISION, it is pure STUPIDITY and INCOMPETENCE. Congress was warned to delay their decision until after January, but the election fears won out. Those who were facing re election did not want to go home and face voters as being against helping those folks facing mortgage foreclosure. (Strategy used by the crooks.)

So it really was not intended for helping people, but intended for WALL STREET crowd. (Those folks who probably use high end providers, if you know what I mean.)

Globalization.....ONE WORLD ORDER....do we want it? Can we stop it?

[generey]

Time to get his and hers Hummers.


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

Posted by pirmin3 at 06:27 AM : Nov 20, 2008


Too funny!

[antoniof123]

The financial models don''t work and the clowns keep telling us everything is fine.

[mikezembill]

Just wait until your kids put bacon grease on ther bread of the morning before they go to school if they have it to do so. And every morning you wake up with nothing i want you to thank the damm republicans.

[hitoyou1]

I see all the sick-oo are out. Don''t let them get you down. The onlt ones running are the ones that spent more then they had.

[swin5]

In 1929 the price of stocks fluttered a lot both before and after the crash. This happened during the summer and fall of 1929. However, after the crash the overall trend was down and the stock market did not hit bottom until the summer of 1930. By then the market had lost about 90% of its value. With the holiday shopping season looking like a dud, it''s not hard to see the same thing happening today. The shopping season may look like a last hope, and when it flops we may see the final decline of the market beginning next year. And if the last depression serves as an accurate predictor, the market will finally level off at around 1200-1400 points. Once a depression starts, it feeds off itself. Already you are seeing massive layoffs by companies that are still reporting profits but are anticipating the decline. Once it reaches a certain point, it can''t be stopped.

[firehose12]

Let the pampered auto execs die along with their mismanaged companies.

Toyota I nominate you to run the show since our helpless fatcats cant figure out how to make a profit.

[myhog6]

Democrats in a Panic.

What plan is needed? Senator Reid and Speaker Pelosi are stalling because they just want 2-months and don''t give a hoot!

The Big 3 Auto problem is they are running out of Cash, and can''t get a loan because banks aren''t lending (to anyone, including those wanting to buy a car). NO CASH, NO PAYROLL.

[firehose12]

The financial models don''t work and the clowns keep telling us everything is fine.

Posted by antoniof123 at 04:28 PM : Nov 20, 2008

The big 3 must be Union ran Democrats - or as most would say - helpless.

[netadmin1-2009]

Perceptions - how can you argue with your statement - you can''t - nicely put.

[staplesla]

These bailouts are a joke. We''ve already given away $2 trillion but haven''t fixed the underlying problem which started this - housing. We must stop rewarding poorly managed companies with bailouts that have no oversight. All these execs seem to care about is vacationing with our money, and today we learn the automaker execs travelled in style to D.C. to beg us for this money.

I hear it argued that we must save the automakers to save jobs. But the total number of jobs provided by automakers and those dependent upon services to automakers account is only 846,000 positions. Yes this sounds big, but Walmart alone has 1.4 million employees. And furthermore, yesterday the automakers stated auto sales will be down to 10 million annually (from the 15 million last year). That to me says job losses/consolidation regardless of whether they get the money. And furthermore, they stated this money will only get them through March. Why are we not investing in our roads, alternative forms of energy, etc?....each which would create millions of jobs?

Any bailout should be spent on fixing the housing crisis or it won''t matter if GM/Ford/Chrysler survive. If you can''t afford your mortgage payment, you surely aren''t going to buy a car.

If we don''t stop this bailout, this will set a precedent for the airlines to be next, then hotels/travel industry, then restaurants, etc. It''s got to stop.

Contact Congress and tell them to vote no.
http://www.emailthecongress.com

[myhog6]

Senator Harry Reid (D-NV) tries to ridicule 3 Big Auto Execs for flying in a Private Jet.

Did Senator Reid mention suspension of all paychecks to Senators and Congressmen/women if they take an about 2-month break until next year (unless of course some stay to work in Congress doing The People''s Business)?

No one (well almost no one) ridiculed Speaker Pelosi for flying around in a USAF provided jet selling her "book" during the August break!

[william_lerd]

Credit markets are seized up because the banks and investors dont trust one another anymore. Thats what deregulation gets you.

[myhog6]

The Worst Case scenario that I see is the Big 3 Auto companies declare Chapter 11 (maybe as soon as next week). They have to shutdown completely all manufacturing. No union member will be allowed on the property. No significant number of non-union employees - mostly security guards and security management.

THEY HAVE NO CASH

In Chapter 11, they explain to the Court that they can''t even open the plant without a loan of Cash to meet payroll and other committments.

THEN THERE IS THE TRICKLE DOWN where all their suppliers do the same thing.

Maybe 50,000,000 unemployed before Barack Obama is sworn in as President January 20, 2009. By Spring the unemployment could top 100,000,000 to 150,000,000.

Did anyone really believe unemployment insurance would be there for this many? NOT A CHANCE.

$500 per week for 150,000,000 is 75 Billion per week.

That translates to $1 Trillion per quarter or $4 Trillion per year on unemployment.

How long can the US sustain this level of give away in a Depression?

[lemonskink]

Chant: Four more years.

Dam.n right blame Bush. I don''t want to hear any of these pencil necked geek Republicans try and lay it on anyone but this imbecile who is hell bent on destroying America. 1.5 billion a week to his war and his cronies who are involved there. Wanting to do away with protections for endangered species in the US. The man is a madman.

[missingamerica]

"Investors seemed unmoved by remarks from Treasury Secretary Henry Paulson who said in a speech Thursday that the financial crisis hitting the global economy was something likely to occur only "once or twice" in a 100 years. He cautioned against overreacting by implementing regulations that are too onerous."

Yeah...only once or twice a century - and only then if the American people permit Republican greed to dictate the nation''s direction.

We should export our Republicans to Iran...they are far and away the deadliest weapon ever used against us, so Iran should be a piece of cake.


lolll...but Paulson, being a greedy little Republican, STILL cannot avoid insisting that they be permitted the room to be corrupt...

[swin5]

Late in the presidential campaign when the focus turned to the economy, it should have been obvious to everyone that neither Obama nor McCain had any clue what was going wrong and what, if anything, could be done about it. We had some choice to make: 1. Republican - let the wealthy and powerful have free reign, destroy the middle class, send jobs overseas, concentrate the wealth in the hands of the few, maintain the American Empire with military entanglements all over the world. 2. Democratic - create a socialist welfare state, big government will take care of everybody (and rule over everybody), don''t deal with an issue like health care from the point of view of why people don''t have jobs that provide health care but instead have government just give it to them, continue down the road of moral decay through support of homosexuality, gambling, abortion, pornography, etc. We are headed into the next Great Depression. The policies of both political parties have lead us there and neither party has the answers to guide us through it. George W. Bush was a big dud, and now Obama will be a big dud. Too bad we will have to wait to 2012 until we have another chance at finding a wise leader and not a typical self-serving politician.

[incog-nito]

Why are we not investing in our roads, alternative forms of energy, etc?....each which would create millions of jobs?

Posted by staplesla at 04:46 PM : Nov 20, 2008

Great idea, but we don''t have the money to invest in anything. The $700 billion bailout money was all borrowed, to the paid back later with interest. Any more investment (read spending) to stimulate the economy will have to come from either 1) taxes and 2) borrowing. Americans are generally tax-averse, so it''s been all borrowing. There''s just no good options left.

[hawksprings]

This is just a small preview of what the Obama years will be like.

Our great great grandchildren will learn about the Great Depression II in school someday.

[myhog6]

Posted by staplesla at 04:46 PM : Nov 20, 2008

It isn''t a bailout.

What Big Business doesn''t have is CASH reserves. They are draining cash at abnormal rates because no new CASH is coming in from new vehicle sales.

Banks and Lending companies are holding off on auto-loans to consumers. Dealerships across America are failing, closing, or streamlining. Mechanics standaround with no work unless it is full Warranty work.

All this started in Subprime Lending and the Congressional Mismanagement and Totally Skewed Oversight of the House and Senate committees charged with responsibilities for Financial Institutions!

You can blame a lot of others, but it all goes back to Congress and the Democrat liberals trying to destroy America and create a Socialist Country at YOUR EXPENSE.

Am I wrong? What was Senator Ted Kennedy doing while recovering from his brain surgery at home? Universal Health Care - the dream of a fully loaded Socialist.

[misands]

This is a scream! I just wonder how low will it go. LMAO!

[used2bfedup1]

Posted by perceptions5 at 07:49 AM : Nov 20, 2008

Dont u mean liberal socialist as opposed to the conservative faschists that have been running the country into the dirt the last 8.

Im not sure which is worse socialism or fascism. Government of the corporation, by the corporation and for the corporation lets greed run rampant which is what seems to have happened.

LOL on your chicago gangsta... as opposed to the ret@rded cowboy who got us into this mess. Whats cheney the Halliburton houligan? McCain the Irish War Machine...

Palin aptly named Caribou Barbie.

[missingamerica]

Great idea, but we don''t have the money to invest in anything.

Posted by incog-nito at 05:03 PM : Nov 20, 2008

loll...what does that have to do with anything? We have the printing presses...

[lemonskink]

Has anyone heard from George Bush lately?

[misands]

I predict that as people loose their 401K nest eggs, and/or get laid-off, more people will foreclose on their homes and the cycle will continue to snowball until most value in the country is gone and utter despair grip the nation.

[used2bfedup1]

Has anyone heard from George Bush lately?

Posted by Lemonskink at 05:09 PM : Nov 20, 2008

Naah he has to keep a low profile as he kills the rest of the endangered species regulations.

[incog-nito]

loll...what does that have to do with anything? We have the printing presses...

Posted by ibsteve2u at 05:06 PM : Nov 20, 2008

And that''s part of the problem. Just look at any banana republic.

[lemonskink]

Why does Bush hate America so much? He''s hell bent on destruction of it like the very terrorists that he concocted to keep his Republican base wearing depends.

[nomorekidds]

So when does real panic set in ?? Maybe its on an individual basis. Everyone will panic when they get notified of no longer being employed. And what are the unemployed supposed to do now?? Is there any point in looking for a job???? Should everyone believe they have only 6 months of unemployment compensation, or will that get extended for everyone?? Should we be planning to grow our own potatoes in the summer of 09 ???

[incog-nito]

Maybe it''s time America goes back to the good old days: hunting and foraging for food.

[peterandrew3]

Talk about spin! Reid and Pelosi could not get enough votes from their own party to pay back the UAW with an auto bailout bill. As a stall tactic to give them time to round up more votes, they asked for more info by December 2nd. Looks like the millions the uaw spent to elect democrats did not pay off! For the true version of the story visit us!
http://www.conservativeamerican.org

[incog-nito]

Posted by NoMoreKidds at 05:15 PM : Nov 20, 2008

You mean to say you haven''t panicked yet?

[staplesla]

CBS makes it sound like the bailout news today caused the downturn in the market, but that''s not correct. It was caused because of all the bad news today, including weak readings on the labor market and manufacturing sector. Plus it didn''t help today when the rumors started floating that Citigroup is in major trouble and may be out of biz by the weekend.

[biblethumpar]

One More Failure under SHRUBS nose...
the Economy is tanking and now CEOS are lining up like Crack Addicts at midnight, willing to give free BJs for a fix....

[misands]

Fear and panic will grip the nation soon enough. As people grow more desperate, they will begin to pillage and plunder the local stores. Law enforcement will be overwhelmed by riots and panic. Tires will be burning in the streets amid the sporadic sounds of gun fire.

[lloydbest1]

Maybe 50,000,000 unemployed before Barack Obama is sworn in as President January 20, 2009. By Spring the unemployment could top 100,000,000 to 150,000,000.
Posted by Myhog6 at 04:57 PM : Nov 20, 2008

Myhog....the total population of eligable working adults in the country isn''t 150 million. Are you suggesting an unemployment rate of greater than 100%?

I don''t think anyone doubts we are not merely heading for Great Depression II but are already well into it. But even during the worst of the last one, some people were still working.
This comming crunch will be much, MUCH worse than the last one. Maybe even to the point of world-wide famine and complete social breakdown. I don''t think it will get quite that bad but it is certainly possible. But claiming the unemployment figures you do is making a terrible situation much worse than it is...The reality is bad enough.

[tincup356]

who is going to be able to afford new cars and trucks anyway?even if they bail out the big 3 , next year sales will be just as bleak, consumers either don''t have the money or cant get a loan either way new cars wont sell, unless CEO''s with golden parachutes have a real big need for cars.

[lemonskink]

It''s time to restructure America. Bush and Cheney must be charged for their crimes. Let the world know the people of the US mean business. That''s a start.

[staplesla]

The U.S. industry as a whole is no longer built around the automakers. Autos fall in the category of Consumables of the GDP which account for only 32%. Of that percentage, automakers and the suppliers to the automakers, account for less that 5% of that 32% (the rest being furniture, clothing, medicine, etc.). Remember too that we import many of our autos as well.

The U.S. industry is now built around medicine, IT, agriculture, financial.

[lemonskink]

In 20 years you will see some very wealthy Bush''s and Cheney''s in their families. Watch and see.

[lemonskink]

Can''t close down the auto plants. We''ll need them for the war machine when China attacks.