- The Washington Times - Friday, August 1, 2008

NEW YORK | Wall Street sank Thursday after weak readings on economic growth and the job market touched off renewed concerns about the financial health of businesses and consumers. The Dow Jones Industrial Average fell more than 200 points.

The Commerce Department’s report that gross domestic product grew at a 1.9 percent pace in the second quarter disappointed investors. Economists polled by Thomson Financial/IFR had expected growth of 2.4 percent in the broad measure of the economy’s health.

Investors were also concerned about Labor Department data saying that the number of people seeking jobless benefits jumped to the highest level in five years.

A $4.5 billion cash offer from Bristol-Myers Squibb Co. for its cancer drug partner ImClone Systems Inc. kept the Nasdaq Composite Index from falling as sharply as other indexes. In other positive news, oil prices declined, and an index of Midwestern business activity indicated growth.

But Wall Street could not shake off its worries about the economy — particularly after sobering remarks from former Federal Reserve Chairman Alan Greenspan on CNBC late in the afternoon. Mr. Greenspan said he would be more surprised if the United States did not enter recession than if it did.

The comments came after Treasury Secretary Henry M. Paulson Jr. said in a speech in Washington that the economy will continue to grow at a moderate pace for the rest of the year, and the government’s $168 billion stimulus package had helped grease the economy’s wheels.

“I think in the short run, it’s going to be a tug-of-war between the optimists and the pessimists,” said Jack Caffrey, equities strategist at JPMorgan Private Bank. “I think both sides are going to be able to find enough information to support their case.”

At some point one side will give in, he said.

“The challenge is, you can’t identify what the catalyst is that will change psychology.”

The Dow fell 205.67, or 1.78 percent, to 11,378.02, continuing its string of erratic, triple-digit daily swings.

Broader stock indicators also declined. The Standard & Poor’s 500 Index fell 16.88, or 1.31 percent, to 1,267.38, while the Nasdaq fell 4.17, or 0.18 percent, to 2,325.55.

Light, sweet crude fell $2.69 to settle at $124.08 a barrel on the New York Mercantile Exchange after rising more than $4.50 Wednesday. Oil has fallen more than $20 since hitting a high above $147 on July 11, raising hopes that inflation pressures could ease.

Investors sifted through a flurry of quarterly profit reports for clues about the economy.

The Walt Disney Co. fell $1.32, or 4.2 percent, to $30.35 after the company reported a slowdown in the U.S. advertising market in the current quarter and weak box office results in the period that ended in June.

Motorola Inc. jumped 96 cents, or 12.5 percent, to $8.64 after posting a surprise profit for its second quarter. The company said it shipped more cell phones than in the first quarter.

Eastman Kodak Co. reported a second-quarter profit but the results missed Wall Street’s forecast. The stock declined $1.13, or 7.2 percent, to $14.64.

Declining issues outpaced advancers by about 3 to 2 on the New York Stock Exchange. Consolidated volume came to 5.16 billion shares, up from 5.06 billion shares Wednesday.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide