- The Washington Times - Friday, August 8, 2008

NEW YORK | Wall Street tumbled Thursday as further troubles in the financial sector, higher unemployment and lackluster retail sales touched off fresh concern about the economy. The Dow Jones industrials skidded nearly 225 points, while bond prices shot higher as investors once again sought the safety of government debt.

The stock market’s pullback erased most of the 370-point gain the Dow logged the previous two sessions.

Heading the list of worries, insurer American International Group Inc. reported a loss of more than $5 billion for the second quarter and the Labor Department said the number of newly laid-off people seeking jobless benefits last week jumped to its highest level in more than six years. Weak sales reports from Wal-Mart Stores Inc. and other retailers added to investor unease.

Meanwhile, an announcement by the credit-ratings agency Moody’s Investors Service that it had placed the long-term ratings of credit card lender American Express Co. on review for possible downgrade exacerbated investors’ nervousness.

Bill Stone, chief investment strategist for PNC Wealth Management, said the stream of economic news has been somewhat negative lately, short-circuiting the market’s attempts to build on rallies.

“The concerns about a weakening economy always run to worries about the financials and then you add some negative news to them on their own and you’ve got what we’ve got today,” he said.

The Dow fell 224.64, or 1.93 percent, to 11,431.43. It was the Dow’s sixth triple-digit move in the past two weeks, illustrating how commonplace big swings in the indexes have become amid investors’ uncertainty about the economy.

Broader indicators also slid Thursday. The Standard & Poor’s 500 Index fell 23.12, or 1.79 percent, to 1,266.07, and the Nasdaq Composite Index fell 22.64, or 0.95 percent, to 2,355.73.

Oil prices that fell sharply earlier in the week rebounded Thursday, likely adding to Wall Street’s downbeat mood. Light, sweet crude rose $1.44 to settle at $120.02 on the New York Mercantile Exchange.

Bonds jumped as investors sought the protection of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its prices, fell to 3.93 percent from 4.05 percent late Wednesday. The dollar mostly rose against other major currencies, while gold prices fell.

Stocks briefly pulled off their lows in the session after the National Association of Realtors said its seasonally adjusted index of pending sales for existing homes rose 5.3 percent in June from May, rather than declining as economists had expected. Despite the June increase, the index sits 12 percent below year-ago levels.

American International Group fell $5.25, or 18 percent, to $23.84 after the company reported its loss and said weakness in the credit markets has erased several billions of dollars in value from its credit default swaps portfolio and other investments.

Other insurers declined following AIG’s report. Genworth Financial Inc. fell $1.62, or 10 percent, to $14.67.

American Express fell $1.59, or 4.2 percent, to $36.40 after the Moody’s announcement.

Wal-Mart, the world’s largest retailer, said same-store sales, or stores open at least one year, rose a less-than-expected 3 percent in July as consumers began using up their government stimulus money. Wal-Mart, also a Dow stock, fell $3.80, or 6.3 percent, to $59.96.

Other retailers’ reports disappointed Wall Street. Target Corp. fell $2.25, or 4.7 percent, to $45.76, while Macy’s Inc. fell 76 cents, or 3.9 percent, to $18.92.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where consolidated volume totaled 5.09 billion shares, compared with 4.77 billion shares traded Wednesday.



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