Dow off 2.7 pct, S&P 500 off 2.3 pct; Nasdaq off 1.6 pct
Disappointing outlooks, layoffs add to economic worry
Treasury sells four-week bills at a high of 0.000 pct
FedEx ends down more than 14 pct after cutting outlook
US stocks fell on Tuesday as profit warnings from FedEx and others prompted investors to retrench after two days of big gains, while unprecedented demand for the safety of government securities signaled fear remains a dominant force in the market. -- PHOTO: REUTERS
NEW YORK - US STOCKS fell on Tuesday as profit warnings from FedEx and others prompted investors to retrench after two days of big gains, while unprecedented demand for the safety of government securities signaled fear remains a dominant force in the market.
Transportation stocks led the pullback, with express shipper FedEx tumbling 14.5 per cent after saying its 2009 profit would fall shy of estimates due to the global slowdown.
The Dow Jones transportation average fell more than 5 per cent. Shares of FedEx closed down 14.5 per cent at US$63.65 (S$95.87).
Markets were also rattled by an extraordinary sale of US Treasury bills, widely viewed as the world's safest securities.
Investors were so fearful of everything from deflation to the precarious condition of the banking system that they sacrificed all expected return just to hand over cash to the US Treasury for safekeeping, producing an unprecedented zero per cent rate.
'There's still a ton of fear. People are now paying the government to take their money. Something is wrong,' said Mr Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
The Dow Jones industrial average fell 242.85 points, or 2.72 per cent, to 8,691.33. The Standard & Poor's 500 Index gave up 21.03 points, or 2.31 per cent, at 888.67. The Nasdaq Composite Index was down 24.40 points, or 1.55 per cent, at 1,547.34.
Trading was choppy after shares jumped Monday to a month high, and analysts said profit-taking contributed to the negative tone. The Nasdaq gained more than 1 per cent at one point before succumbing as losses mounted.
With the day's slide, the S&P 500 was again negative on the month, after a brief pop into positive territory on Monday.
The fall in Treasury bill rates, which effectively means investors are willing to pay the US government a fee to look after their money, comes as stocks attempt to form a sustainable rally off recent lows.
The broad S&P 500 is up nearly 20 per cent from the Nov. 21 lows but remains down close to 40 per cent for the year so far.
'Every day when the market closes we hear earnings estimates lowered, projections lowered,' said Mr Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
'We hear the scenario of an economic slowdown which touches every asset class and every single equity sector.'
Texas Instruments jumped 4.9 per cent to US$15.55 despite cutting its fourth-quarter revenue forecast.
Procter & Gamble was the Dow's biggest weight, falling 4.3 per cent to US$59.79 after UBS cut its price target.
3M fell for a second consecutive session as Citigroup and Credit Suisse cut their targets on the stock a day after the manufacturer cut its 2008 outlook and announced 1,800 job cuts. The stock was down 2.1 per cent to US$56.15.
US-traded shares of Sony gained 2.3 per cent to US$20.50 after news it will cut 16,000 jobs, the biggest cuts by an Asian company during the financial crisis.
Trading was moderate on the New York Stock Exchange, with about 1.44 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 2.27 billion shares traded, above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2,133 to 989 while decliners beat advancers on the Nasdaq by about 1,849 to 918. -- THOMSON REUTERS
