Profit warnings, poor job outlook weigh on stocks
Unlike the panicked swings seen last fall, however, the decline was more orderly, and some retrenchment had been expected following sharp rises in the final days of 2008 and into 2009.
Wall Street has been absorbing poor economic and corporate news far better since last November as some have dared to hope for a recovery in the second half of this year or early 2010, but the latest round of unnerving news proved to be too much to set aside.
Joe Saluzzi, co-head of equity trading at Themis Trading LLC, said the market is simply reacting to the day's drubbing of bad news. "One too many punches and the fighter finally went down," he said.
Media industry bellwether Time Warner Inc. said Wednesday it would book a $25 billion impairment charge in the fourth quarter for its cable, publishing and AOL units, while Intel Corp. said it now expects fourth-quarter revenue to drop a greater-than-expected 23 percent on a further weakening in demand from computer makers. The company already reduced its forecast in November.
Time Warner sank 70 cents, or 6.5 percent, to $10.28, while Intel dropped 88 cents, or 5.8 percent, to $14.49. Alcoa tumbled $1.23, or 10 percent, to $10.89.
The market was already worried about what the Labor Department's report on employment would bring on Friday, and received a disappointing harbinger Wednesday as the ADP National Employment Report said private sector employment fell by 693,000 in December, more than had been expected. The report is an unofficial gauge that the market has been increasingly monitoring as U.S. job losses mount.
The ADP report is making investors question whether government steps to revive the economy will prove sufficient.
"The market has shrugged off some bad news recently, and it's starting to get to the point where it can't do that anymore," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group.
The Dow has rallied about 20 percent since its multiyear lows in late November, and the Standard & Poor's 500 index has surged nearly 25 percent. The S&P 500 began Wednesday's session up 3.5 percent for the first three trading days of 2009.
"We've had a big move," Fullman said. "What we're looking at now is just people getting a little cautious here."
Comments
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