Signs of a weakening economy, chiefly among domestic and foreign automakers, drove Wall Street down in light trading Monday at the start of a shortened holiday week.
All three major indexes advanced from their lows of the day in the final 30 minutes of trading.
Lower volume was expected through the four-day week. Christmas falls on Thursday, and many investors traditionally take off this time of year. Low volume generally does not provide an accurate indication of market trends.
The auto industry, both at home and in Japan, apparently weighed on the markets, especially after the Toyota Motor Corp. predicted an operating loss of almost $1.7 billion for its fiscal year that ends in March. It will mark the first time the carmaker will have gone into the red since it began reporting its earnings in the late 1930s.
It also predicted its net profit will drop to $550 million.
The Dow Jones Industrial Average fell 59.34, or 0.69 percent, to 8,519.77, after briefly moving into positive territory early in the session, tumbling, and then recovering some of its losses. Monday’s retreat was the fourth-straight daily loss for the Dow.
Broader stock indicators also finished lower. The Standard & Poor’s 500 Index fell 16.25, or 1.83 percent, to 871.63, and the Nasdaq Composite Index fell 31.97, or 2.04 percent, to 1,532.35.
The Russell 2000 Index of smaller companies fell 11.19, or 2.30 percent, to 475.07. Smaller companies tend to be more vulnerable to economic weakness than larger companies.
On the New York Stock Exchange, declining issues outnumbered advancers by more than 2 to 1. Consolidated volume came to 4.31 billion shares, down from 6.04 billion shares on Friday.
Toyota, which produces the popular Camry and the hybrid Prius, which runs on gasoline and battery power, is Japan’s chief automaker and is popular among U.S. car buyers. Sales of Toyota and Honda, Japan’s No. 2 carmaker, have taken sales away from Detroit’s Big Three.
Shares of all major automakers but Honda dropped, including those of GM and Ford, after Credit Suisse Group, an international financial-services group, said General Motors‘ equity is worth zero or near zero. Its rating was cut from neutral to underperform.
GM, whose shares lost 88 cents to close at $3.61, is one of Detroit’s Big Three automakers. It, along with Chrysler, will receive up to $17.4 billion in federal emergency loans. Ford’s shares fell 39 cents to close at $2.59. Toyota’s U.S.-traded shares fell $3.50, or 5.4 percent, to $60.88.
The reluctance of Americans to spend on big-ticket items such as vehicles during what seems to be a worsening recession, with unemployment at 6.7 percent, has had an impact on both Japanese and American car manufacturers.
Oil again sold off on the New York Mercantile Exchange, this time losing $2.45 a barrel or 6 percent to close at $39.91. The price of a barrel of crude has dropped 70 percent since its high of more than $147 in July, the one bright spot for consumers.
Wall Street has shown some signs of relative stability in the last few weeks. Since reaching multiyear lows on Nov. 20, the Dow is up 12.8 percent, and the S&P 500 is up 15.8 percent.
The Associated Press contributed to this report