Stocks plunge in early trading on economic jitters
NEW YORK -- Investors uneasy about the government's ability to quickly turn the economy around kept selling Tuesday, the week's first trading day.
The market is keeping an anxious eye on General Motors gm and Chrysler, both trying to meet a government deadline Tuesday to submit plans showing how they can repay billions of dollars in loans and return to profitability.
Sam Stovall, chief investment strategist at Standard & Poor's, said investors are expecting GM to request the additional money to stay afloat. That will lead to questions such as, "What if GM does go under?" Stovall said.
Meanwhile, President Barack Obama is set to sign the $787 billion stimulus package into law Tuesday. He is also scheduled to outline a plan to help stem mortgage foreclosures Wednesday.
Not even slightly better-than-expected fiscal fourth-quarter results from the world's largest retailer, Wal-Mart Stores, could help bolster the market.
The Dow Jones industrials closed Friday at 7,850.41, lowest close since Nov. 20, when the blue-chip index settled at a five-and-a-half month low of 7,552.29.
Wall Street is coming off a losing week that saw the market turn pessimistic about the stimulus plan and also the government's bank bailout plan. While the government last Tuesday announced the broad outlines of its latest plan to help the banking industry, investors were disappointed because there were not clear answers about how it might work.
Stovall said the lack of a defined bailout package that will remove toxic assets from banks' balance sheets is still weighing on the market.
"Basically, we have new players saying the same old thing," Stovall said. An initial bailout plan to support the banking sector was passed in October under the previous administration.
Elsewhere, new data from the Federal Reserve Bank of New York showed weakening manufacturing in the state. The Empire State Manufacturing Survey hit a new low of negative 34.7. Economists polled by Thomson Reuters were projecting a reading of negative 22.2.
The report is the earliest of several monthly regional snapshots that investors look to for insights on manufacturing.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.71% from 2.90% late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.31% from 0.28% late Friday.
The dollar rose against other major currencies and gold prices also rose.
Oil fell $2.21 to $35.30 per barrel in premarket electronic trading on the New York Mercantile Exchange.
Overseas, Japan's Nikkei stock average fell 1.4%. In afternoon trading, Britain's FTSE 100 fell 2.3%, Germany's DAX index declined 2.6%, and France's CAC-40 fell 2.8%.
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