U.S. Stocks Retain Steep Losses After FOMC Minutes
NEW YORK (MarketWatch) -- U.S. stocks declined Wednesday after the biggest-ever drop in consumer prices and another gloomy housing report offer little cheer to investors already fretting about the fate of the Big Three automakers.
Stocks remained solidly lower after the release of the minutes from the last Federal Open Market Committee meeting, which had the central bank's policy-makers expecting the economic slump to last for as much as a year, if not longer. .
After climbing in and out of positive and negative turf in the early going, the major stock indexes were down decisively in afternoon trades. The Dow Jones Industrial Average slid 232.89 points, or 2.8%, to 8,191.86, with all but one of its 30 components trading lower.
Shares of General Motors Corp. paced the blue chips' decline, down 15.5%.
The chief executives of GM, Ford Motor Co. and Chrysler LLC returned to Capitol Hill for a second day to make their case for the government extending a bridge loan to their ailing industry.
"If one or more of the auto manufacturers were allowed to fail, it would likely bring additional volatility to credit, equity and foreign-exchange markets," said Alex Meister, currency analyst at Wachovia.
The S&P 500 Index fell 32.86 points, or 3.9%, to 826.26, and the Nasdaq Composite Index dropped 62.01 points, or 4.2%, to 1,421.26.
Financial shares fronted the losses, with shares of some of the nation's top life insurers shedding value on worries about their capital conditions, as well as on the status of their applications for investment from the federal government. .
Rivals Lincoln National Corp. and Hartford Financial Services were both slammed, with Lincoln National off 34.5% and Hartford Financial off 28.6%.
Both insurers have applied to the U.S. Office of Thrift Supervision to acquire individual savings and loans as a way of getting large capital infusions from the Treasury Department's $700 billion Troubled Asset Relief Program.
Volume on the New York Stock Exchange topped 866 million, and for every stock on the rise, nine were declining. On the Nasdaq, nearly 604 million shares traded, and decliners topped advancers roughly 5 to 1.
The dollar index which compares the greenback against other major currencies, rose 87.36 from 87.114 in late Tuesday trades. .
Oil dropped as U.S. inventory supplies increased, with crude for December delivery falling 78 cents to $53.61 a barrel. .
In other trade on the New York Mercantile Exchange, gold futures climbed, with the contract for December up $1.3 to $737.3 an ounce. .
Demand for gold coins and bars increased in recent months, even as gold futures fell far from record highs above $1,000 an ounce hit in March, according to a industry report. .
Data clouds
Earlier in the day, the Labor Department reported consumer prices dipped a record 1% in October, driven by an 8.6% drop in energy costs. .
"There's no relief in the beleaguered housing market," analysts at Action Economics said of the Commerce Department's estimate that new-home construction fell to a record low in October.
In a related report, the Mortgage Bankers Association said mortgage applications fell a seasonally adjusted 6.2% last week from the prior one, as lower interest rates on fixed-rate mortgages failed to stir prospective home buyers.
In comments early Wednesday, Federal Reserve Vice Chairman Donald Kohn said regulation is the best means of preventing another financial crisis.
European stocks also fell, with banks getting hit for a third straight session.
In Asia, stocks closed mostly lower. .
On Tuesday, U.S. stocks ended higher after a run-up in the final hour of trade, with the Dow Jones Industrial Average striking its third advance in 10 sessions.
At Tuesday's close, the Dow Jones Industrial Average was down 9.65% in November, according to a preliminaryreport from the Dow Jones Indexes. For the year to date, the blue-chip index was down 36.5%.
By Kate Gibson