Stocks fall on sliding energy sector, weak outlooks
NEW YORK (Reuters) - Stocks fell on Thursday as a sharp drop in oil prices sent the energy sector tumbling and disappointing profit outlooks from large companies such as Merck (MRK.N) raised the specter of a worsening economy.
Chevron (CVX.N) was among the top drags on the Dow, after oil prices fell nearly 7 percent, to the lowest level in almost four years on fears that a slowing economy will sap demand. Chevron slid 4 percent to $71.76 and Exxon fell 3.4 percent to $76.27.
The CBOE Oil Index .OIX tumbled 6.2 percent.
Investors also took some time to digest the latest pitch to Congress from the Big Three U.S. automakers for a rescue package from Washington. An auto sector failure would have widespread repercussions on the economy and the market.
"If they don't come up with a resolution quickly, we're going to go south," said Cummins Catherwood, managing director at Boenning and Scattergood, in West Conshohocken, Pennsylvania.
"When are we going to get the next piece of good news?"
Shares of General Motors (GM.N) fell 16.1 percent to $4.11 while Ford (F.N) lost 6.7 percent to $2.66.
Contributing to the gloomy outlook were disappointing outlooks from blue-chip companies such as drugmaker Merck (MRK.N) and bleak November sales from most major retailers, including discount chain Target Corp (TGT.N).
The Dow Jones industrial average .DJI dropped 215.45 points, or 2.51 percent, to end at 8,376.24. The Standard & Poor's 500 Index .SPX fell 25.52 points, or 2.93 percent, to 845.22. The Nasdaq Composite Index .IXIC slumped 46.82 points, or 3.14 percent, to close at 1,445.56.
Also weighing on sentiment was a fresh round of job cuts from companies, including Dow component AT&T (T.N), which is chopping 12,000 jobs, and media company Viacom (VIA.N)(VIAb.N), which is planning to trim 850 employees.
AT&T (T.N) shares slipped 3.1 percent to $28.17 after the top U.S. phone company announced the job cuts, which amount to about 4 percent of its workforce, and reduced its capital spending budget.
Viacom's Class A stock shed 0.7 percent to $15.90 on the New York Stock Exchange.
The retail sector was a bright spot after better-than-expected monthly sales from Wal-Mart (WMT.N), which gained 1.3 percent to $55.11. The S&P retail index .RLX added 1.5 percent.
Another rare positive note was sounded by home builders, whose shares jumped after Freddie Mac reported on Thursday that the average U.S. 30-year fixed mortgage rate scored the biggest weekly percentage drop in 27 years. The Dow Jones U.S. Home Construction Index .DJUSHB shot up 5.9 percent.
Still, Wal-Mart's advance and home builders' gains were overshadowed by dismal corporate news and more negative economic data that signaled a deepening recession. Continued...
