Auto industry woes returned to the forefront today, as the Obama administration gave a resounding thumbs-down to the business plans submitted by bailed-out car companies General Motors (GM) and Chrysler. Investors reeled in shock at news that CEO Rick Wagoner was asked by the White House to step down from his post at GM, but President Obama defended the bold move by asserting, "It's a failure of leadership -- from Washington to Detroit -- that led our auto companies to this point." The threat of a possible bankruptcy filing also inspired motion sickness on the Street, with the president commenting that automakers could use Chapter 11 as a "tool" to help clear away old debts and get them back on their feet. Elsewhere, Treasury Secretary Timothy Geithner contributed to the market's manic Monday by warning that he expects additional losses from the troubled financial sector.
The Dow Jones Industrial Average (DJIA 7,522.02) settled on a sizable loss of 254 points, or 3.3%, as all but 2 of its 30 components fell. IBM (IBM) and Johnson & Johnson (JNJ) were the day's outliers, with both stocks muscling fractionally higher. As you might expect, GM shares swallowed the largest decline, followed closely by financial firm Bank of America (BAC) and aluminum giant Alcoa (AA). Despite its stomach-churning drop, the Dow recovered respectably from its intraday nadir of 7,437 -- a deficit of 339 points.
The S&P 500 Index (SPX 787.53) also suffered, ending the day with a plunge of 28 points, or 3.5%. Today's dismal performance ended the SPX's 5-day streak atop its 50-day moving average. Finally, the Nasdaq Composite (COMP 1,501.80) shed 43 points, or 2.8%, and finished narrowly above the round-number 1,500 region. Earlier, the COMP tagged an intraday low of 1,485.
Turning to equities in focus, Cal-Maine Foods (CALM) fell short of analysts' third-quarter earnings expectations ... DryShips Inc. (DRYS) was hammered lower after receiving a going concern notice from auditors ... Range-bound Procter & Gamble (PG) may be an ideal candidate for a credit spread ... Put options are a popular choice on KB Home (KBH) as the stock attempts to rebound ... Skepticism is slowly rising on Abbot Laboratories (ABT) as the company prepares to report earnings ... and today's Quote of the Day comes from none other than ousted GM CEO Rick Wagoner, who offered the automaker's employees some words of reassurance in his farewell email:
"GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future."
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, Andrea Kramer took a look at the CBOE Market Volatility Index (VIX) in this week's edition of Advanced Options Strategies. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Crude oil surrendered its short-lived foothold above $50 per barrel, as gloomy news regarding the auto and financial sectors reawakened lingering concerns about energy demand. A simultaneous bounce in the greenback also applied pressure to the dollar-denominated commodity. In fact, the front-month contract slipped today to an intraday nadir of $48.11, marking its lowest price since March 18. Oil for May delivery settled not far from this low, ending the session on a loss of $3.97, or 7.6%, at $48.41 per barrel.
Gold futures caught an early lift today from uncertainty surrounding the fate of major automakers, but the malleable metal reversed course later in the session amid strength in the U.S. dollar. The domestic currency and the Japanese yen were both buoyed today by safe-haven buying ahead of this week's Group of 20 meeting, which is not expected to yield a coordinated global economic stimulus. After bouncing between positive and negative ground, gold for April delivery shed $7.70, or 0.8%, to finish at $915.50 per ounce. More actively traded June gold ended on a loss of $7.60 at $917.70 per ounce.
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