- The Washington Times - Friday, January 30, 2009

Wall Street plunged into the doldrums Thursday because of worries about corporate earnings and a jump in the number of people signing up for unemployment checks for the first time, both indicators of a recession that is biting hard.

At the close, the Dow Jones Industrial Average plummeted 226.44, or 2.70 percent, to 8,149.01. The tech-laden Nasdaq Composite Index nose-dived 50.50, or 3.24 percent, to 1,507.84. The broader Standard & Poor’s 500 sank 28.95, or 3.31 percent, to 845.14.

The markets fell to their lowest point in the final hour of trading, ending four days of rallies and erasing all of Wednesday’s gains.

Financials turned in a weak performance, down 8 percent for the day, after leading the market in the previous session.

Investors are concerned that the $700 billion bailout, $350 billion of which already has been spent, will not be enough to ensure recovery of the major banks, according to Richard Sparks, an analyst with Schaeffer’s Investment Research in Cincinnati. “That’s what’s pressuring the markets at this time,” he told CNBC.

Sales of new homes plummeted 14.7 percent in December in the slowest monthly pace since the Commerce Department started keeping records in 1963. The fall in new-home sales for last month meant a drop to a seasonably adjusted annual rate of 331,000, down from a revised figure for November of 388,000, the department said.

Builders sold 482,000 homes for 2008, the lowest number since 412,000 were sold in 1982, a recession year.

The Labor Department reported that the number of people filing for jobless benefits for the first time rose for the third consecutive week to 588,000 for the week ended Saturday, up 3,000 from last week’s downward-revised number of 585,000.

The number of people receiving continuing unemployment checks stood at 4.77 million, the highest since the department began keeping records in 1967, a Labor Department spokesman told The Washington Times.

More reports of poor fourth-quarter profits from companies ranging from airlines to automakers are indicators of the worsening 13-month recession that soured the markets after a run-up Wednesday based on hopes that the Obama administration will create a “bad bank” to take over the debts of major financial institutions.

Ford Motor Co. said it lost $5.5 billion in the October-through-December quarter of 2008 because of weakening auto sales, although it was less than the $7.7 billion the nation’s No. 2 automaker dropped in the third quarter. Ford said it still has no plans to seek U.S. government financial help.

The losses came to $2.46 a share compared with the similar period in 2007, when it lost $2.8 billion, or $1.13 a share.

The losses mean more job cutbacks, and Ford said it will eliminate 1,200 positions, or 20 percent of its work force, from its credit division.

Major companies announced earlier this week that tens of thousands of people will be dismissed from their jobs because of the recession.

Among the air carriers, Continental Airlines Inc. said it lost $266 million in the fourth quarter because of increases in the cost of fuel and labor and decreases in the number of passengers, a result of people flying less because of the recession.

That came to a loss of $2.33 a share for the Houston-based airline compared with a loss of $32 million, or 33 cents a share, in the similar quarter in 2007.

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