- The Washington Times - Tuesday, December 9, 2008

Wall Street sank Tuesday after two consecutive trading days of rallies, apparently because of negative earnings outlooks for some major companies that served as a sharp reminder that the recession is here to stay for a while.

The Dow Jones Industrial Average dropped 242.85 points, or 2.72 percent, to 8691.33, and the tech-heavy Nasdaq sank 24.40, or 1.55 percent, to 1547.34. The broader Standard & Poor’s 500 dipped 21.03, or 2.31 percent, to 888.67. The Dow had dropped about 270 points before it regained ground.

Sony Corp., the Japanese electronics maker, announced that it will cut 8,000 jobs — 4 percent of its global labor force — to reduce costs by $1.1 billion annually because of the worldwide economic downturn.

At the same time, interest rates on four-week Treasury bills went to zero from 0.04 percent a week earlier during a Treasury Department auction. It showed that investors were willing not to earn interest in exchange for the safety of the securities.

“People are buying Treasuries for safety,” Todd Leone, managing director at Cowan and Co. in New York, told The Washington Times. “They’re afraid.”

He said the market downturn after it rallied Monday and Friday marked a healthy sell-off. The market just wasnt able to hold” a rally. But, he said, “straight up is not good for the market.”

Chipmaker Texas Instruments Inc. forecast that its earnings and revenue this quarter will be substantially below earlier expectations, and FedEx, the overnight carrier, said its earnings and capital spending for fiscal 2009 will be lower because the deteriorating economy reduced the number of package deliveries.

The optimism of the past two sessions seemed to disappear in the figures of earnings forecasts, including a reflection of hope for a $15 billion auto industry bailout.

Senate Majority Leader Harry Reid, Nevada Democrat, said he hoped for a vote by Wednesday.

The bailout legislation would give emergency loans to General Motors Corp. and Chrysler LLC, the two neediest cases. Ford Motor Co. has said it has reserves that could help it weather the financial crisis until sometime next year.

In addition, the bill would create an “auto czar,” who would oversee a broad restructuring of the industry and could demand the money back if the carmakers could not ensure their survival. The czar would be named by President Bush.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide