Jobs data, tech gloom gives Wall Street jitters
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The Dow Jones plummeted to 2.71 percent, its worst result in a month, after a revenue warning by computer giant Intel and a bleak private sector jobs report heightened fears of recession.
REUTERS - U.S. stocks suffered their worst decline in more than a month on Wednesday after a grim private-sector jobs report coupled with a revenue warning from top chip maker Intel Corp revived deep concerns about the economy.
Energy shares slid after data showed an abundance of crude oil inventory in the United States, the world's largest energy consumer, with demand eroded by the economic slowdown. U.S. crude futures slumped more than 12 percent.
Two days ahead of the U.S. government's key nonfarm payrolls report for December, a worse-than-expected private-sector jobs report highlighted the challenges facing President-elect Barack Obama as he makes plans for a large economic stimulus package.
Recession fears were heightened after Intel said its revenue for the fourth quarter would not meet the lowered forecast it had given in November, citing weakening demand for personal computers. Intel, the world's biggest maker of the central processing units at the heart of every PC and a technology bellwether, was among the main laggards on the Nasdaq.
The Intel news compounded negative sentiment from aluminum producer Alcoa's announcement late Tuesday it would cut more than 15,000 jobs, halve capital spending and sell businesses to weather the global downturn.
"Reality set back in," said Fred Dickson, market strategist and director of retail research at D.A. Davidson & Co in Lake Oswego, Oregon. "Investors were expecting bad news on the earnings front and the Alcoa news combined with Intel reminded investors how bad things really are".
The Dow Jones industrial average fell 244.68 points, or 2.71 percent, to 8,770.42. The Standard & Poor's 500 Index dropped 28.00 points, or 3 percent, to 906.70. The Nasdaq Composite Index tumbled 53.32 points, or 3.23 percent, at 1,599.06.
Chevron and ExxonMobil were among the primary weights on the Dow, while the S&P index of energy stocks dipped 3.8 percent. Chevron lost 4.4 percent to $73.96, while Exxon shed 2.6 percent to $78.25.
After five days of gains, technology shares were among the biggest weight on the market after Intel's warning, indicating the heavy toll from the economic slump on both business and consumer spending.
Intel shares fell 6.1 percent to $14.44 on the Nasdaq, while Apple stock lost 2.2 percent to $91.01 and Microsoft stumbled 6 percent to $19.51.
The S&P 500 index of technology shares fell 3.7 percent and the semiconductor index was down 4.9 percent.
Further evidence of the spreading recession came from media company Time Warner Inc, which forecast a fourth-quarter loss, sending its stock down 6.3 percent to $10.29.
According to ADP, a private employment service, U.S. private employers shed 693,000 jobs in December, up sharply from the revised 476,000 jobs lost in November and far more than economists estimated.
Among financials, Morgan Stanley fell 7.6 percent to $18.10 and Goldman Sachs dropped 4.8 percent to $84.50 after Sanford Bernstein cut its 2009 earnings forecast for both firms. The S&P Financial index shed 5.1 percent.
Obama, set to be sworn in on Jan. 20, has proposed the largest U.S. infrastructure investment since the 1950s and massive tax cuts for consumers and businesses.
The new U.S. Congress began work to pass a stimulus package. Obama expects to inherit a budget deficit approaching $1 trillion and says his administration will have to make tough budget choices.
The benchmark S&P 500 has risen 20 percent since its Nov. 21 low.
Volume was light on the New York Stock Exchange, where about 1.17 billion shares changed hands, below last year's estimated daily average of 1.49 billion. On the Nasdaq, about 2.03 billion shares traded.
Decliners outnumbered advancers on the NYSE by a ratio of about 4 to 1, while on the Nasdaq about three stocks fell for every one that rose.
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