Legislators made progress last night on the proposed economic stimulus plan, with the House of Representatives placing its (heavily partisan) seal of approval on the bill. Unfortunately, another grueling round of employment data proved that lawmakers can't move quickly enough to resuscitate the ailing U.S. economy. The Labor Department reported this morning that the number of workers filing for unemployment benefits spiked to an all-time high last week, and that troubling news was underscored by fresh job cuts at Starbucks (SBUX), Jabil Circuit (JBL), Charles Schwab (SCHW), Eastman Kodak (EK), and more. Against this gloomy backdrop, stocks gapped sharply lower when the opening bell sounded.
The Dow Jones Industrial Average (DJIA 8,149.01) extended its losses throughout the session, and finished with a hefty loss of 226 points, or 2.7%. Only 3 of the Dow's 30 components finished higher: 3M Company (MMM), Merck (MRK), and Procter & Gamble (PG). Financial firms paced the 27 declining blue chips, with Bank of America (BAC) and JPMorgan Chase (JPM) swallowing the sharpest drops. The Dow finished today narrowly below its 10-day moving average.
The S&P 500 Index (SPX 845.14) fared even worse than the Dow, ending on a deficit of 29 points, or 3.3%. Today's plunge ended the SPX's brief trip above its 20-day moving average. Finally, the Nasdaq Composite (COMP 1,507.8) pulled back in step with the SPX, wrapping up the session on a loss of 50 points, or 3.2%. The tech-rich COMP settled just a handful of points away from the psychologically critical 1,500 level.
Turning to equities in focus, General Motors (GM) said it will suspend its "jobs bank" effective Monday, at the government's request ... Exxon Mobil (XOM) was hit with a downgrade for the second consecutive session ... Tractor Supply Company (TSCO) pleased its recent crop of bearish bettors by reporting weaker-than-expected earnings ... Eli Lilly & Co. (LLY) fell short of analysts' quarterly revenue expectations as demand for its drugs slipped ... Baidu.com (BIDU) extended its rally into a second day, but remained stuck beneath resistance ... and today's Quote of the Day comes from Steve Kenneway, president of the Massachusetts Correction Officers Federated Union. After learning that the state's cash-strapped Department of Corrections spent tens of thousands of dollars on high-definition flat-screen TVs for prisoners, Kenneway commented:
"I think you can find a better use for $77,000 than to go out and buy TVs for guys who are used to stealing them."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:
And, in case you missed it, Joseph Hargett analyzed the prospects for SanDisk (SNDK) in this week's edition of The Casual Contrarian. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Economic concerns also applied pressure to oil futures today, as a barrage of downbeat data stoked fears that anemic energy demand probably won't recover during the short term. By the close, crude oil for March delivery dropped 72 cents, or 1.7%, to end the day at $41.44 per barrel. Earlier, the contract tumbled to an intraday low of $40.18, but oil pared its losses as some market-watchers predicted a tight gasoline supply during the peak summer months. Specifically, analyst Jan Stuart of UBS warned that refinery activity could soon drop below 70%, due to weak demand and seasonal maintenance.
On the other hand, gold futures caught a lift from today's onslaught of bleak economic data. Despite a show of strength from the U.S. dollar, the malleable metal snapped a 2-day losing streak as investors fled the equities market for the safe-haven allure of gold. Gold for February delivery added $16.90, or 1.9%, to end the day at $905.10 per ounce.
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