Wall Street tumbles on GM fears
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Fears that US motor giant General Motors may be heading for collapse sent shares skidding deeper on Wall Street. The car manufacturer is the latest institution hit by the financial crisis to request an emergency government bail-out.
US stocks skidded deeper into the red but off their lows Tuesday on fears of a collapse of General Motors and a series of troubling corporate news amid the global credit crisis.
The Dow Jones Industrial Average tumbled 176.58 points (1.99 percent) to finish at 8,693.96 and the tech-heavy Nasdaq dropped 35.84 points (2.22 percent) to 1,580.90.
The broad Standard & Poor's 500 index retreated 20.26 points (2.20 percent) to 898.95.
"Discussions about the fate of General Motors and the US auto industry are driving the negative bias, yet a growing sense that the bailout request line is growing longer and more complicated to prioritize is taking a toll on investor confidence," said Patrick O'Hare, analyst at Briefing.com.
The market nervously was awaiting October retail sales figures and a key consumer confidence indicator due Friday, expected to show a sharp deterioration in the world's biggest economy.
With no macroeconomic news to digest and the bond market closed in observance of the Veterans Day holiday, investors fixated on the woes in the corporate sector.
GM was under the spotlight after its president and chief executive Rick Wagoner recently appealed for government aid to avert bankruptcy.
After plunging 22 percent Monday, shares dropped another 13.02 percent Tuesday to 2.92 dollars, their lowest level since 1943.
In the battered financial sector, credit card firm American Express tumbled 6.17 percent to 22.50. The Federal Reserve announced late Monday that AMEX had sought and was granted authority to convert into a full-status bank, making it eligible for aid from the Treasury's 700 billion dollar bank bailout package.
That announcement underscored the enormous 24 billion dollar third-quarter loss posted Monday by American International Group, the giant insurer nationalized in a record-breaking government rescue in September. AIG shares dipped 0.88 percent to 2.26 dollars.
"Regarding the bailouts, one cannot help asking a simple question: How far are regulators willing to extend the 'guarantee net?'" Citigroup Global Markets analysts wrote in a client note.
Citigroup slid 3.66 percent to 10.80 after announcing it was placing a moratorium on foreclosures for most home loan borrowers, and that it would work with some 500,000 stretched mortgage customers to help them keep their homes. It was the first time Citi shares had closed below 11 dollars since 1996.
Bank of America dropped 4.06 percent to 18.69 and Morgan Stanley lost 3.43 percent at 14.08.
Oil majors plunged as oil prices dropped below 60 dollars a barrel in New York. ExxonMobil, the biggest Dow component, lost 2.78 percent to 71.96 and Chevron gave back 3.15 percent at 72.00.
Among other stocks in focus, Alcoa fell 7.13 percent to 10.94 after the aluminum giant firm announced an additional production cut due to falling demand.
Coffee shop retailer Starbucks dropped 1.77 percent to 10.00 dollars after publishing a disappointing quarterly profit report.
Wall Street extended Monday's losses as renewed corporate worries, especially General Motors, overshadowed China's announcement of a massive economic stimulus package. The Dow fell 0.82 percent, the Nasdaq 1.86 percent and the S&P 500 1.27 percent.
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