- The Washington Times - Monday, January 12, 2009


Wall Street skidded lower Monday on fears that the forthcoming season of corporate earnings reports will reflect lower profits and a weakening economy. The Dow tumbled more than 125 points.

At the close, the Dow Jones Industrial Average sank 125.13 points, or 1.46 percent, to 8474.05. The Nasdaq, loaded with high-tech industry stocks, fell 32.80, or 2.09 percent, to 1538.79. The broader Standard & Poor’s 500 dived 20.09, or 2.26 percent, to 870.26. All three of the major indexes came off their session lows.

Energy stocks took a hit on lower prices for a barrel of oil, which dropped to $37.67, a loss of $3.16 for the day on the New York Mercantile Exchange.

The markets went negative because most investors are sitting on their money — there’s an estimated $8.8 trillion held in money market funds, bank savings accounts and certificates of deposits, Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati told The Washington Times.

“There are real fears, real concerns, and people are selling before” earnings reports are released, he said.

There is money to be invested — “that’s one bullish point,” Mr. Detrick said — but the confidence is not there to induce investors to put their money into the markets.

“People are so paralyzed by what”s happened” in the stock markets that they are waiting for “some really good news” before they will get back in, he said. “Earnings seasons expectations are low.”

He pointed to aluminum giant Alcoa as one example because of its decision to eliminate 13,500 jobs, or 13 percent of its work force. It later declared a loss of 28 cents per share for the fourth quarter compared with expectations by economists, CNBC said, of an 11-cent loss.

Alcoa’s price per share closed down 75 cents to $10.06, a loss of 6.94 percent.

Other major corporations such as chip manufacturer Intel and Wal-Mart Stores Inc. already have indicated that they are in for rough times during what may be worse then the two biggest post-World War II downturns, those of the mid-1970s and the early 1980s, both of which lasted for 16 months.

The current recession is in its 13th month, and economists do not expect a turnaround until midyear.

Corporate earnings reports are expected to be a drag on the markets, perhaps postponing their comeback from the autumn’s precipitous fall.

Wall Street experienced its worst week since November last week. The Dow was off 4.8 percent for the week, the Nasdaq was down 3.7 percent, and the S&P 500 fell 4.5 percent.

If there will be a bright spot in the markets, coming off a week in which the Labor Department reported that unemployment leaped from 6.7 percent in November to 7.2 percent in December, it may come in Mr. Obama’s push for his near-$800 billion stimulus package just a week before his inauguration.

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