Stocks tumble in final hour of trading as recession worries deepen
NEW YORK -- Stocks finished sharply lower Monday as investors pored over more signs of economic weakness, including a huge round of layoffs in the financial sector.
After a turbulent week that sent the Dow Jones industrials down nearly 340 points, investors found little solace in the latest news. Stocks zigzagged throughout the session, finally giving way to a stream of late-day selling that left the Dow Jones industrials lower by 223 points.
In a signal that banks are still struggling in the wake of massive losses tied to bad mortgage debt, Citigroup is cutting another 52,000 jobs in the coming quarters. The company said that in addition to job cuts, it plans to lower expenses by about 20% and has reduced its assets by more than 20% since the first quarter of the year.
Investors were also nervously waiting to see whether the troubled U.S. automakers would get a bailout. Senate Democrats, who plan to introduce legislation Monday, want to use part of the $700 billion Wall Street bailout to help prop up Detroit's Big Three carmakers: General Motors, Ford Motor and Chrysler. A vote was expected as early as Wednesday.
Meanwhile, a better-than-expected reading on industrial production did little to boost investor sentiment. The Federal Reserve said Monday that industrial output rose 1.3% last month, after plunging in September by the largest amount in over 60 years. Economists, on average, had expected an increase of 0.2%, according to a survey by Thomson/IFR.
Still, the improvement wasn't encouraging enough, said Anthony Conroy, managing director and head trader for BNY ConvergEx Group, adding that investors want a more concrete sign that the economy could be improving.
"I think we're seeing a tremendous amount of bad economic data," he said. "Earnings have basically hit a wall and don't seem like they are coming back anytime soon."
The Dow fell 223.73, or 2.63%, to 8,273.58, near its lows of the session.
Standard & Poor's 500 index fell 22.54, or 2.58%, to 850.75, while the Nasdaq composite index dropped 34.80, or 2.29%, to 1,482.05.
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