Wall Street slips on recession worry, but Intel up late
NEW YORK |
NEW YORK (Reuters) - Stocks fell on Tuesday as fears that the global economy may not avert recession slammed shares of technology and consumer companies, eclipsing a government rescue plan for banks.
A day after the Dow leaped 936.42 points in its biggest one-day point gain ever, investors looked past the U.S. pledge to pour $250 billion into major banks and instead focused on the dismal outlook for earnings and the economy.
A disappointing outlook from PepsiCo further fueled those worries, especially given that soft drink- and snack-makers are usually seen as holding up in economic hard times. PepsiCo's shares had their worst day since the 1987 stock market crash.
The Nasdaq underperformed throughout the day. Intel was among the top drags on the Nasdaq as investors worried about the chipmaker's quarterly results. Intel lost 6.2 percent to $15.93 on Nasdaq, while an index of semiconductor stocks slid 5 percent.
But after the closing bell, Intel's shares shot up more than 4 percent after its earnings beat analyst expectations.
During the regular session, financial shares rose after the U.S. Treasury's latest step to stabilize the financial system in hopes of averting further damage to the economy. Citigroup jumped 18.2 percent and Bank of America climbed 16.4 percent.
"While a lot of news has been focused on financials, there is a slow motion tsunami coming our way as far as the economy is concerned," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut.
"Techs are cyclicals and have heavy exposure overseas, and the global economy is feeling a greater brunt of the slowdown," Goldman said.
The Dow Jones industrial average was down 76.62 points, or 0.82 percent, at 9,310.99. The Standard & Poor's 500 Index was down 5.34 points, or 0.53 percent, at 998.01. The Nasdaq Composite Index was down 65.24 points, or 3.54 percent, at 1,779.01.
Energy and materials companies also fell as the price of oil slid on growing worries that a recession would curb the demand for oil and other commodities. Chevron shares fell 1.9 percent to $68.54.
U.S. crude oil futures for November delivery fell $2.56, or 3.15 percent, to settle at $78.63 a barrel on the New York Mercantile Exchange.
PepsiCo's weaker-than-expected earnings also deepened concerns about how consumer spending will hold up in the face of declines in home values and stocks, as well as tighter credit. PepsiCo's shares tumbled 11.9 percent to $54.40.
Coca-Cola was the biggest drag on the Dow, on investor concerns that rival soft-drink maker Pepsi's weak results may signal weakness in the rest of the beverage sector. Coca-Cola shares fell 7.5 percent to $43.73.
An index of retail stocks fell 4 percent on worries about consumer spending.
Apple Inc shares fell 5.6 percent to $104.08 after it cut the price on its entry-level notebook computer to $999 in a move expected to attract budget-minded buyers at a time when recession fears loom over the global economy.
Citigroup and Bank of America ranked among the Dow's biggest percentage gainers. Citigroup climbed 18.2 percent to $18.62, while Bank of America surged 16.4 percent to $26.53. They are among the institutions widely reported to be included in the Treasury Department's plan to take equity stakes in banks to shore up the battered financial system.
The Treasury did not name the nine banks that will initially be participating in the program.
Trading was moderate on the New York Stock Exchange, with about 1.88 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.89 billion shares traded, above last year's daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by 17 to 15, while on the Nasdaq, decliners beat advancers by about 2 to 1.
(Reporting by Kristina Cooke; Editing by Jan Paschal)
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