[Democrooks in charge of House, Senate AND the White House? Investors make a dash for the tall weeds.....expect more of this....CW]
U.S. Stocks Tumble in Market's Worst Two-Day Slump Since 1987 By Lynn Thomasson Nov. 6 (Bloomberg) -- U.S. stocks slid, sending the market to its biggest two-day slump since 1987, after jobless claims jumped and the shrinking economy crushed earnings at companies from Blackstone Group Inc. to News Corp. Blackstone, the largest private-equity firm, fell 12 percent after posting the biggest quarterly loss in its 18 months as a public company. News Corp. sank 16 percent after the media company controlled by Rupert Murdoch said ad sales decreased. Chevron Corp. fell 6.4 percent as oil tumbled to a 19-month low, while an unexpected decrease in chain-store sales dragged down 25 of 27 shares in the S&P 500 Retailing Index. ``We're a long way from the end of the economic challenges,'' said Mike Morcos, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. ``Earnings next year are going to be significantly lower and estimates are going to continue to come down.'' The Standard & Poor's 500 Index fell 5 percent to 904.88, extending its two-day loss to 10 percent. The Dow Jones Industrial Average retreated 443.48 points, or 4.9 percent, to 8,695.79. The Russell 2000 Index of small U.S. companies declined 3.7 percent to 495.84. The MSCI World Index of 23 developed markets lost 5.9 percent to 925.09. The two-day tumble following Election Day wiped out more than half of the market's rebound from a five-year low on Oct. 27. Both the S&P 500 and Dow average posted their biggest two-day slides since plunging more than 24 percent as rising borrowing costs helped spur the market crash of October 1987. Europe Slides BP Plc led a 5.6 percent retreat in Europe's benchmark index even after the Bank of England unexpectedly cut its benchmark interest rate by 1.5 percentage points to 3 percent to contain damage from a recession. Switzerland's central bank and the European Central Bank reduced their main lending rates by 50 basis points. The S&P 500 is down 38 percent this year, poised for the steepest annual retreat since 1937. The benchmark for U.S. equities has plunged 42 percent since its record in October 2007 after the U.S. economy shrunk in two of the last four quarters. The VIX, as the Chicago Board Options Exchange Volatility Index is known, climbed 17 percent to 63.68. The measure tracks the cost of using options as insurance against declines in the S&P 500. ``It's just been a steady, steady sell,'' said Alan Gayle, the Richmond, Virginia-based senior strategist at Ridgeworth Investments, which oversees about $70 billion. ``The pain and frustration and anxiety of these volatile moves from one day to the next has discouraged a lot of investors to move to the sidelines.'' Lost Jobs About 481,000 workers filed initial jobless claims last week, the Labor Department said today in Washington, exceeding the 477,000 projected by economists surveyed by Bloomberg News. The number of people staying on benefit rolls was the most since February 1983. A report tomorrow will probably show U.S. employers eliminated jobs in October for a 10th consecutive month, based on economists' estimates. Earnings at companies in the S&P 500 that have reported third-quarter results fell 9.2 percent on average, Bloomberg data show. Analysts expect full-year profits to drop 7.7 percent, according to a compilation of analysts' estimates. S&P 500 energy companies lost 6.1 percent as a group, as oil declined for the third time this week. Crude for December delivery retreated 6.9 percent to $60.77 a barrel, the lowest settlement since March 2007. Exxon Mobil, the world's largest oil company, tumbled $3.73 to $69.96, while Chevron Corp. slid 6.4 percent to $70.11. Tech Slump Cisco Systems Inc. declined 2.6 percent to $16.94. The biggest maker of networking equipment forecast the first revenue drop in five years because of the financial crisis. Advanced Micro Devices Inc. tumbled 11 percent to $3.17. The second-largest maker of personal-computer processors plans to cut 500 jobs, about 3 percent of the workforce, as part of its effort to return to profitability. Technology companies in the S&P 500 lost 5.4 percent collectively. Dell Inc., Intel Corp. and Hewlett-Packard Co. fell more than 5 percent. Amazon.com Inc. sank 9.2 percent to $47.22. The largest Internet retailer was cut to ``hold'' from ``buy'' at Citigroup Inc., which noted the shares' surge of as much as 36 percent since third-quarter results and concerns consumer spending will slow. GM's Survival General Motors Corp. had the steepest decline in almost a month, tumbling 14 percent to $4.80. The largest U.S. automaker is focused on winning government aid to survive through 2009, not to help a merger with Chrysler LLC, as it uses cash faster than it forecast, people familiar with the plans said. GM plans to give an update on liquidity when it reports third-quarter results tomorrow. Tyco Electronics Ltd. fell the most in more than a year, slumping 12 percent to $16.78. Fiscal fourth-quarter profit slid 55 percent on restructuring costs and the company forecast a ``significant'' drop in sales and earnings this period. News Corp.'s Class A shares tumbled $1.53 to $8.26. Fiscal 2009 profit will drop in the ``low to mid teens'' in percentage terms, the company said after previously forecasting a gain of 4 percent to 6 percent. Financial stocks in the S&P 500 fell 6.7 percent as a group, led lower by Bank of America Corp. and Wells Fargo & Co. The group is down 52 percent in 2008 as the slowing economy raises concern banks will be hit by more bad loans after the subprime mortgage market's collapse led to $690 billion in credit losses worldwide. Blackstone's Loss Blackstone tumbled $1.05 to $7.55 after the financial crisis eroded the value of the businesses and real estate it has acquired, triggering a quarterly loss excluding items of $502.5 million. Blackstone had been expected to break even, based on the average estimate of seven analysts in a Bloomberg survey. Wells Fargo declined 9.2 percent to $28.77 after the biggest bank on the U.S. West Coast said it plans to sell stock to fund the purchase of Wachovia Corp. The bank also said losses from the acquisition will be less than previously expected. The bank, which disclosed the share offering yesterday in a statement, had said it would raise as much as $20 billion to fund the deal. That was before the Treasury said it was buying $25 billion of Wells Fargo's preferred shares. Libor Declines The slump in financials came even as the London interbank offered rate, or Libor, for three-month loans in dollars dropped 12 basis points to 2.39 percent today, the lowest level since November 2004, according to the British Bankers' Association. Las Vegas Sands Corp., billionaire Sheldon Adelson's casino company, posted the biggest drop since becoming a publicly traded company with a 33 percent plunge to $7.85 after saying it may default on debt and face bankruptcy. Big Lots Inc. plunged 26 percent to $17.31 for the steepest decline in the S&P 500. The largest U.S. seller of overstocked and discontinued items said third-quarter profit may be below its prediction. October same-store sales fell 0.9 percent at U.S. chain stores, the first drop in seven months, and declined 4.2 percent excluding Wal-Mart, the International Council of Shopping Centers said. Economists surveyed by Bloomberg had projected a 0.7 percent increase. Excluding the effect of the shifting Easter holiday, it's the first decline since at least 2000, according to research firm Retail Metrics LLC. Grocers Gain Whole Foods Market Inc. climbed 1.7 percent to $10.48. The largest U.S. natural-foods grocer received a $425 million equity investment from Leonard Green & Partners LP. Kroger Co., the biggest U.S. supermarket chain, added 1.1 percent to $26.99. Safeway Inc., the third-largest, rose 2 percent to $22.03. Analysts are lowering fourth quarter and 2009 profit forecasts for U.S. companies as third-period results miss projections at the highest rate in almost 11 years. Companies in the S&P 500 may see fourth-quarter earnings advance 15 percent, down from 42 percent projected at the end of August, according to a Bloomberg survey of analysts. Profits in 2009 may grow 13 percent, analysts say, compared with the 24 percent predicted two months ago. 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