U.S. Stocks Retreat, Led by Financials; Bear Stearns Tumbles

U.S. stocks fell for a third day to the lowest level since 2006, led by a plunge in financial shares, on speculation earnings estimates will prove to be too high as the economy slows and credit losses spread.

The decline in banks steepened as Bear Stearns Cos. tumbled the most since 1987 on concern the brokerage was facing financial difficulties, even after former Chief Executive Officer Alan Ace Greenberg said the speculation was ridiculous. Fannie Mae and Freddie Mac, the largest U.S. mortgage finance providers, both lost more than 11 percent on expectations they face increasing losses as the housing slump deepens.

The Standard & Poor's 500 Index declined 20 points, or 1.6 percent, to 1,273.37 and is down almost 19 percent from its Oct. 9 record. The Dow Jones Industrial Average lost 153.54, or 1.3 percent, to 11,740.15. The Nasdaq Composite Index decreased 43.15, or 2 percent, to 2,169.34. Five stocks fell for every one that rose on the New York Stock Exchange.

It's a painful time for investors, said Sam Rahman, the Boston-based head of U.S. equities at Baring Asset Management Inc., which manages $36 billion. Not only are the concerns of economic weakness more palpable, but you're getting continued concerns about the impact of the credit crisis.

All 10 industry groups in the S&P 500 dropped today on growing concern that the economy will slip into a recession after banks posted $188 billion in subprime-related losses and analysts forecast earnings for members of the index will decline this quarter and next. The benchmark for U.S. equities is approaching a so-called bear market, which is marked by a decline of at least 20 percent from a peak.

Brutal selloff on Wall Street

Dow tumbles over 250 points after weaker-than-expected jobs report revives recession worries. The Nasdaq plunges.

Stocks tanked Friday, with the Dow shedding over 250 points, after a weaker-than-expected December jobs report exacerbated recession fears.

The Dow Jones industrial average tumbled almost 2 percent. The broader S&P 500 index lost around 2.5 percent. The Russell 2000 small-cap index fell 3.2 percent.

The Nasdaq composite lost 3.8 percent, or just over 98 points. According to Stock Trader's Almanac, it was the tech-heavy index's biggest one-day point loss since Sept. 17, 2001, the first day the market reopened for trading after having been closed in the aftermath of 9/11. On that day, the Nasdaq lost 115.83 points.

A weaker-than-expected unemployment rate sparked a big stock selloff. Bonds rallied, as investors sought safety and the dollar fell versus other major currencies. Oil and gold prices retreated from recent records.

Employers added 18,000 jobs to their payrolls last month, short of forecasts for 70,000 and down from a revised 115,000 in the previous month. The 18,000 figure marked the weakest monthly jobs growth since August 2003.

The unemployment rate, generated by a separate survey, rose to 5 percent - a more than two-year low - from 4.7 percent in the previous month. Economists thought it would rise to 4.8 percent.

Average hourly earnings, the report's inflation component, rose 0.4 percent after rising a revised 0.4 percent in the previous month. Economists thought wages would rise 0.3 percent.

Stocks have been volatile for months as investors have mulled the fallout from the housing and credit market crises, and worried that the economy could be heading into recession.

The weak labor market report amplified those worries.

"In September, October and November we saw pretty solid payroll numbers, indicating that although the economy was in a bit of a slowdown, the jobs market was holding up, giving us some sort of floor," said Georges Yared, chief investment strategist at Yared Investment Research. "That floor was pulled out from under us this morning."

In the next few months, investors will be looking to see if the December employment report was a temporary indication or the start of a longer-term downtrend for the labor market.

"Jobs growth in the month was moribund and we should expect it to be moribund for a while," said Brett Hammond, chief investment strategist at TIAA-CREF. "But I think we shouldn't get too overwhelmed by the notion of a recession yet."

He said that economic growth prospects look to pick up in the second half of the year, and that by that point the housing issues will be "through the trough," although the woes for that sector won't be over yet.

In the short-term, investors will be looking to see how the Dec. jobs report impacts near-term Federal Reserve policy, with bets now rising that the central bank could cut rates more aggressively, perhaps at the next meeting on Jan. 29 and 30. (Full story)

The Federal Reserve announced Friday that it will lend up to $60 billion this month to banks through its new auction process as a means of easing the credit crunch.

Treasury prices climbed, as investors sought safety in the comparably less risky government debt. The rise lowered the yield on the 10-year note to 3.84 percent from 3.89 percent late Thursday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped versus the yen and the euro.

U.S. light crude oil for February fell $1.27 to settle at $97.91 a barrel on the New York Mercantile Exchange, after hitting a record trading high above $100 a barrel during Thursday's session.

COMEX gold for February delivery fell $3.40 to settle at $869.10 an ounce, pulling back from an all-time high hit Wednesday.
Jobs weak, unemployment soars

Stock declines were broad based, with 29 out of 30 Dow components falling, led by tech stocks such as Intel, IBM and Hewlett-Packard and financial companies such as Citigroup and JP Morgan Chase.

Intel's decline followed a JP Morgan downgrade to "neutral" from "overweight." Separately, the chipmaker said it is pulling out of the One Laptop Per Child program.

Intel also trades on the Nasdaq and was among the 96 components of the Nasdaq 100 that fell on the session.

A slew of retail stocks fell on concerns that weaker job growth will slam consumer spending. The S&P Retail index lost nearly 4 percent.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by more than three to one on volume of 1.26 billion shares. On the Nasdaq, decliners beat advancers four to one as 2.07 billion shares changed hands.

In other economic news, the Institute for Supply Management's reading on the services sector showed a smaller monthly decline than economists had been expecting.

Wall Street also considered the results from Thursday's Iowa caucuses, which kicked off the 2008 presidential election. Former Arkansas Gov. Mike Huckabee won on the Republican side and Sen. Barack Obama of Illinois won for the Democrats.

Stocks were mixed Thursday as a jump in factory orders helped temper concerns about inflation as oil and gold prices hit record highs.

Source - CNN Money

Dow drops over 250pts, Wipro declines 6%

US stocks tumbled on Friday as a sharp rise in unemployment data heightened fears that the economy is heading into a recession.

Both the main indices, the Dow and the Nasdaq Composite, had their worst three-day start to a year. While the Dow had its worst start since the Great Depression, the Nasdaq Comp never had such a start since inception in 1971.

While the Dow plunged 256.54 points (1.96%) to 12,800.18, the Nasdaq Composite was down 98.03 points (3.77%) at 2,504.65.

Indian ADRs, too, closed with sharp losses on Friday. Wipro declined nearly 6% to $13.66. HDFC Bank was down over 5% at $121.53. Infosys, Satyam, ICICI Bank and Tata Motors also declined.

U.S. Stocks Drop as Inflation Tops Forecasts; Amazon, EBay Fall

U.S. stocks fell, heading for their steepest weekly drop in more than a month, after accelerating inflation raised concern higher prices will slow economic growth.

Merrill Lynch & Co. slid on a CNBC report that writedowns at the third-biggest U.S. securities firm may increase by as much as $6 billion. Black & Decker Corp. declined the most in five months after the largest U.S. power-tool maker cut profit forecasts. Amazon.com Inc. and EBay Inc. retreated after Internet research firm ComScore Inc. said holiday online sales grew at the slowest pace ever.

The Standard and Poor's 500 Index declined 8.24, or 0.6 percent, to 1,480.17 at 12:54 p.m. in New York. The Dow Jones Industrial Average slid 82.1, or 0.6 percent, to 13,435.86. The Nasdaq Composite Index lost 14.32, or 0.5 percent, to 2,654.17. About three stocks dropped for every one that rose on the New York Stock Exchange. Benchmarks in Asia fell, while most European indexes rose.

The markets will have some indigestion with this inflation number, said Michael Strauss, who helps oversee about $43 billion as market strategist and chief economist at Commonfund in Wilton, Connecticut. Consumers are recognizing they really have to hunker down as they see their heating oil costs and their gasoline costs.

The consumer price index climbed 0.8 percent in November, the most since September 2005, the Labor Department said. Prices excluding food and energy rose 0.3 percent, also more than forecast.

Dollar Surges

The dollar advanced the most against the euro since May 2005 on speculation the Federal Reserve won't cut interest rates again. Odds that the Fed will hold its benchmark lending rate at 4.25 percent at its January meeting rose to 22 percent after the report, up from no chance since the last quarter-point rate-cut on Dec. 12.

Black & Decker slumped $5.65, or 7.1 percent, to $74.48. The largest U.S. power-tool maker said it expects fourth-quarter profit excluding some items to be $1.03 a share. The tool maker had previously predicted earnings of at least $1.55 a share.

Retail stores lost 1.6 percent for the steepest decline among 24 industry groups in the S&P 500. Amazon.com, the biggest online bookstore, fell $2.29 to $90.11. EBay, the largest Internet auctioneer, dropped $1.16 to $32.93.

Internet sales from Nov. 1 through Dec. 11 increased 19 percent to $20.5 billion, Reston, Virginia-based ComScore said. Online sales in November and December may rise 20 percent, a record low for the industry, and slower than the 26 percent pace a year earlier.

'Getting Hit'

U.S. retailers may report the slowest sales growth since 2002 this year as higher fuel and food costs discourage spending during the holiday season, the National Retail Federation said.

The consumer is getting hit by higher energy prices and given the state of the overall housing market, we're expecting consumers to pull in their spending, said Rose Grant, who helps manage about $2 billion at Eastern Investment Advisors in Boston. We don't think consumer spending will be as strong as in past quarters.

Merrill Lynch lost 72 cents to $57.11. S&P 500 financial stocks slipped 0.8 percent.

Goldman Sachs Group Inc. added $3.71, or 1.8 percent, to $212.19. The world's biggest securities firm may post record full-year profit of more than $11 billion on Dec. 18, boosted by $4 billion from bets on subprime mortgage-related lending, the Wall Street Journal reported, citing analysts.

The gains by a few traders who speculated that subprime securities would lose value helped to compensate for $1.5 billion to $2 billion of losses elsewhere, the newspaper said. A Goldman spokesman declined to comment, according to the Journal.

BioMarin Pharmaceutical Inc. had its steepest gain since 2003, climbing $6.81, or 23 percent, to $36.57. The maker of treatments for rare disorders won approval from U.S. regulators to market a pill for a childhood disease that can cause mental retardation.

Source - Bloomberg

Shakeup at News Corp.

Rupert Murdoch names two Britain-based lieutenants to oversee Dow Jones, while son James looks increasingly like News Corp.'s future chief.

Two of Rupert Murdoch's senior hands in the viciously competitive British newspaper business will assume the top posts at Dow Jones and Company.

According to people familiar with Murdoch's plans, Les Hinton, who oversees News International, Murdoch's British newspaper operation, will be named chief executive of Dow Jones in the wake of the resignation Thursday of Richard Zannino, who was CEO for two years.

Hinton, who has previously worked for Murdoch both in Australia and the United States, is possibly the media baron's longest-serving lieutenant.

He's been with Rupert every step of the way, said one News Corp. insider.

In addition to putting Hinton in charge of Dow Jones after Murdoch's $5-billion acquisition closes Dec. 14, Robert Thomson, the editor-in-chief of London's Times newspaper, is expected to replace Gordon Crovitz as publisher of the Wall Street Journal.

Zannino had an eventful two year run as Dow Jones' chief executive, and was the first person at the company the billionaire media baron told of his intention to bid for the company - over a breakfast in Murdoch's midtown office back in March. Zannino was put in the awkward position of not taking a public position on the unsolicited offer for weeks because the company was controlled by a family, the Bancrofts, who initially seemed to rebuff News Corp.
Dow Jones CEO out the door

Rupert and I have been discussing since September my moving on from the company after the closing, Zannino said. I will leave Dow Jones knowing the best is yet to come for readers, customers and employees under Rupert's leadership.

Under a change-in-control provision that was enhanced after Murdoch's bid, Zannino could be entitled to a payout worth as much as $25 million. Crovitz would be entitled to around $8 million.

I understand Rich's decision to seek new challenges, Murdoch said in a statement. During nearly two years as CEO, he proved himself to be an effective leader who revitalized Dow Jones during a time of great change in the industry.

Adding to the shakeup at News Corp., James Murdoch, Rupert's son, is expected to be elevated from his post as CEO of BSkyB in London to oversee all of News Corp.'s European and Asian businesses. Such a move would clearly put James in place among Murdoch's six children from three marriages to eventually take over running News Corp. from their father, who is 76.

James, who is 34, took the CEO job at BSkyB four years ago and has been aggressively expanding the business, which is controlled by News Corp., into new areas such as telephony and Internet connections. As chairman, James will succeed Rupert, while the company's current chief financial officer, Jeremy Darroch, will become CEO. Previously, James has overseen News Corp.'s U.S. Internet investments and its StarTV business in Asia.

Source - CNNMoney

Dow at 7-month low

Blue chips close at lowest point since April on worries about mortgage and credit markets and the surge in oil prices. Markets closed for Thanksgiving.

Stocks slumped Wednesday, with the Dow closing at a 7-month low, as worries about the credit and mortgage market and higher oil prices hit investors hard ahead of what for many will be a long holiday weekend.

Treasury prices rallied, the dollar fell, oil prices edged lower and gold prices rose.

The Dow Jones industrial average lost 211 points or 1.6 percent. That set the Dow at its lowest point since April 17, when it ended the session at 12,773.04.

The S&P 500 index lost 1.6 percent and the Nasdaq composite lost 1.3 percent.

The stock selloff was very broad, with homebuilders, banks, mortgage lenders and technology shares leading the decline.

Financials and housing have been a wet blanket on the entire market, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research. We're seeing the weight of the subprime worries and the credit crunch coming home to roost.

All financial markets are closed Thursday for Thanksgiving and Friday's abbreviated session ends at 1:00 p.m. ET. Attendance Friday is expected to be low and trading volume light.

Despite the minimal market action on that day, Friday is key for stocks and the economy in that it is Black Friday, the kickoff for the critical holiday shopping season.

Worries about consumer spending, which fuels roughly two-thirds of the economy, have played a big role in the recent stock market decline. Therefore, the results from retailers will be significant in determining whether stocks rebound in December or fall further.

Everyone is going to be keying on the retail numbers and that could come down on either side of the fence, Sparks said.

If you have a poor start to the Christmas Season, you have real evidence of the economic slowdown, he said. But if the consumer is resilient - although it may cause worries that the Fed won't have a good reason to cut rates - it might also placate investors worried about a recession.

Stocks have been whipsawed lately as investors have muddled through the ongoing housing and credit market turmoil, eyed the weak dollar and fretted over oil prices near $100 a barrel. On Tuesday the Fed issued a sluggish 2008 economic outlook, confirming other recent signs of a slowdown.

Wednesday's index of leading economic indicators and consumer sentiment readings added to the lackluster growth outlook.

Additionally, the Mortgage Banker's Association reported a 3.6 percent drop in applications last week. Separately, 47 of the 50 states saw a drop in existing home sales in the third quarter, according to a National Association of Realtors report.

Equity markets are reacting to the economic slowdown, said Michael Strauss, chief economist at Commonfund. There is some worry about the consumer, about discretionary business spending and about the financial sectors of the economy.

He said that there may also be some worry that the Federal Reserve is behind in addressing these issues, as was reflected by the steep decline in Treasury bond yields Wednesday.

Treasury prices jumped, lowering the corresponding yields, as investors sought safety in the safer haven of bonds. The rally sent the benchmark 10-year note below 4 percent, during the session, for the first time in two years.

There's a pretty strong flight-to-quality there, Strauss said. There's a clear bet that the Fed has further to go, even if the Fed doesn't realize it.

Policy makers meeting on Dec. 11 are widely expected to cut the fed funds rate, a key short-term interest rate by a quarter-percentage point.

Among stock movers, Freddie Mac shares continued to slip after plunging nearly 27 percent Tuesday. The government-sponsored mortgage backer reported a steep quarterly loss Tuesday and a $1.2 billion writedown due to credit losses.

Fellow mortgage lenders Countrywide Financial and Washington Mutual slipped too, while Fannie Mae bounced back after sliding through the morning.

Big banks slumped, including Merrill Lynch, Lehman Brothers and Morgan Stanley.

Declines were broad based, with 29 out of 30 Dow components falling, led by AIG, American Express, JP Morgan, General Electric and Intel.

Intel was one of many chips falling, including Advanced Micro Devices and Micron Technology. Micron slumped for a second session after a Morgan Stanley analyst initiated coverage of the company Tuesday with an underweight rating, AP reported.

The Dow's lone advancer was GM, which recovered from a steep morning selloff after reports said that GMAC, its struggling former finance unit, is taking steps to keep its mortgage unit alive.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost three to one on volume of nearly 1.61 billion shares. On the Nasdaq, decliners topped advancers by seven to three as 2.07 billion shares changed hands.
Federal Reserve battles recession fears

In economic news, the October index of Leading Economic Indicators (LEI) fell 0.5 percent, after rising 0.1 percent in the previous month, suggesting that the economic slowdown could accelerate in the months ahead. Economists surveyed by Briefing.com thought LEI would fall 0.3 percent.

The November consumer sentiment index from the University of Michigan showed a rise to 76.1 from an initial reading of 75.0, but was down from last month's 80.9. Economists thought it would hold steady, on average.

The number of Americans filing new claims for unemployment last week fell by 11,000, as expected.

U.S. light crude oil for January delivery fell 74 cents to settle at $97.29 a barrel on the New York Mercantile Exchange, after having hit a record high of $99.23 in electronic overnight trading.

Oil prices were volatile after the release of the weekly oil inventories report, which showed a surprise drop in crude supplies.

COMEX gold for December delivery rose $7.20 to settle at $798.60 an ounce.

Source - CNN Money

Tough day on Wall Street

Stocks tumble in late-session selloff as investors bail out of banks, techs and commodity shares. Oil prices dip on strong inventory report.

Stocks tumbled Thursday, with financial, commodity and technology shares leading the charge lower as investors continued to worry about the credit market crisis and the strength of the consumer.

The Dow Jones industrial average lost 0.9 percent. The S&P 500 index lost 1.3 percent. The Nasdaq composite declined 1 percent.

Small caps were hit harder with the Russell 2000 index falling 1.4 percent.

Treasury prices rallied, lowering the corresponding yields. The dollar recovered a bit against the euro but fell versus the yen. Oil and gold prices slipped.

Stocks were mixed throughout the morning as investors mulled steady consumer inflation, stronger readings on manufacturing and the latest credit market troubles - amid a decline in oil prices.

But the market began deteriorating heading into the afternoon, reflecting the recent pattern of gyrating throughout the session and then making a decisive move near the close.

And more selling may be on tap, said Joseph Saluzzi, co-head of equity trading at Themis Trading.

He said that with the exception of Tuesday's blockbuster rally, Wall Street's been pretty negative of late and that could continue leading into the Thanksgiving holiday next week.

Friday brings readings on industrial production and capacity utilization, as well as a speech from Federal Reserve Governor Randall Kroszner, a voting member of the central bank's policy committee.

The Consumer Price Index (CPI) rose 0.3 percent in October, matching September's rise and meeting forecasts. So-called core CPI, which excludes food and energy, rose 0.2 percent, also matching September and also in line with forecasts.

Investors have been looking for signs that pricing pressures are remaining mild, even with lower interest rates and higher oil and gas prices threatening to drive up inflation.

The weekly jobless claims report showed a surprisingly large jump in new claims last week.

The fact that the CPI came in as expected was probably positive, although it shows inflation pressures remain a risk, said Douglas Roberts, chief investment strategist at Channel Capital Research.

He said the rise in jobless claims was worrisome in that if the trend continues to higher levels of unemployment - at the same time that pricing pressures remain steady - that will pressure the already taxed consumer. Consumer spending fuels around two-thirds of the economy.

But crude inventories came out kind of confirming that the pressures from oil are dipping in the short term, Roberts said.

U.S. light crude oil for December delivery fell 66 cents to settle at $93.43 a barrel on the New York Mercantile Exchange after the weekly oil inventories report showed a surprise gain in crude supplies last week.

Two more banks were in focus, amid ongoing questions about the fallout from the credit market crisis.

Barclays Capital, a unit of Barclays Group PLC, said it took $2.7 billion in writedowns related to the credit market. The figure was smaller than what some analysts were calling for a week ago. Additionally, the U.K.-based bank said that 2007 profits are running ahead of last year's performance.

Additionally, Swiss financial behemoth UBS could take up to $7.1 billion in writedowns, related to the deteriorating mortgage market, according to a Wall Street Journal article Thursday.

Also reflecting the credit market turmoil, General Electric confirmed reports that a short-term bond fund it manages has suffered big losses in mortgage-backed securities and that as a result, outside investors have dumped their holdings. However, the conglomerate said that the impact won't be felt in current quarter or full-year earnings. GE shares lost 1.8 percent.

A variety of bank stocks retreated, including JP Morgan, Citigroup, Morgan Stanley and Merrill Lynch.

J.C. Penney said that third-quarter earnings fell from a year ago and warned that full-year profits will miss forecasts as well.

In other news, Kraft Foods said it will sell its two dozen Post cereals to Ralcorp Holdings in a stock deal worth $1.7 billion, plus the assumption of debt.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost 4 to 1 on volume of 1.47 billion shares. On the Nasdaq, decliners topped advancers by 7 to 3 on volume of 2.34 billion shares.

In addition to CPI and jobless claims, two regional manufacturing reports were released Thursday.

The Philadelphia Fed index rose to 8.2 from 6.8 in November, topping forecasts for a dip to 5.0. Earlier, the NY Empire State index fell to 27.4 in November from 28.8 in October, versus forecasts for a steeper drop to 18.0.

Treasury prices rose, lowering the yield on the 10-year note to 4.15 percent from 4.25 percent late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rebounded a bit against the euro and declined versus the yen.

COMEX gold for December delivery fell $27.40 to $787.30 an ounce.

Financial stocks lead declines

Another writedown from Citi renews fears about more losses from other banks; upbeat reading on service economy helps pare broader market declines.

Stocks fell on Monday after Citigroup raised another warning flag for the financial sector, but pared losses after a reading on the service economy came in stronger than expected.

The Dow Jones industrial index fell about 0.3 percent more than 2-1/2 hours into the session. The broader S&P 500 index and the tech-fueled Nasdaq both lost about 0.4 percent.

Citi said it would write down an additional $8 to $11 billion due to the decline in value of subprime-related assets. The bank also announced the departure of CEO and Chairman Charles Prince.

The news dragged on the financial sector stocks, as investors worried additional losses could follow from other banks and brokerages.

"The immediate catalyst was Citigroup but the broader issue is it looks like you are getting another wave of asset writedowns," James Awad, chairman of WP Stewart Asset Management, said.

"The fear is if financial institutions go through another period of stress, it could create another seize up in the credit markets," he added.

On the economic front, a reading on the service sector of the economy came in above expectations. The Institute for Supply Management's index for measuring the health of non-manufacturing industries rose to 55.8, up from 54.8 in September and above analysts' estimates for a reading of 54. A reading above 50 indicates expansion in the sector.

Source - CNNMoney

Brutal selloff on Wall Street

Dow down almost 367 points, its third worst day of the year, on fears about credit and housing sector, earnings, record-high oil prices, slide in dollar, what the Fed will do next.

Stocks tumbled Friday as record-high oil prices, more problems in the bank sector and slower corporate earnings growth revived worries about an economic slowdown.

The Dow Jones industrial average lost around 367 points, seeing its third-biggest point loss of the year, its worst since the steep selloff in early August in the midst of the credit and mortgage market mess.

The decline Friday left the blue-chip indicator at its lowest point since Sept. 17, the day before the Federal Reserve cut interest rates for the first time in 4 years, triggering a rally that was cut short this week.

The S&P 500 index lost 2.6 percent and the Nasdaq composite gave up 2.7 percent.

Disappointing earnings from Caterpillar, Honeywell and others exacerbated concerns about weak third-quarter profits. Meanwhile, Wachovia became the latest financial services firm to reveal how the credit and mortgage market crisis had hit its profits.

Oil prices ended lower Friday, but not before hitting an all-time high of $90.07 a barrel in electronic trading. The dollar fell to a new record low against the euro and also slipped versus the yen. Treasury prices surged, as investors sought safety in the comparably safe haven of bonds.

The declines reflect a certain shifting in perspective, said Ram Kolluri, president at Global Investment Management.

"We have fully come to the queasy realization that the U.S. economy may slow down considerably," Kolluri said.

He said that this realization has been driven by the ongoing problems in the real estate market, rise in gold and other commodity prices, and especially $90 a barrel oil - all of which is hitting Corporate America, and the consumer.

Consumer spending fuels roughly two-thirds of economic growth, and after a lot of predictions, actually does seem to be slowing substantially.

Stocks have had a tough week as investors digested a batch of lackluster earnings reports and tried to put into context what the run up in oil prices could mean for consumer spending and the economy.

"We're seeing this kind of selloff because of where oil is and because the banks are reminding people that we have a lot further to go before we get to the bottom of the real estate issue," said John Forelli, portfolio manager at Independence Investments.

Forelli said that this marks a change in thinking from earlier in the month, when a rash of billion-dollar writedowns from big banks seemed to give investors a "the worst is behind us" perception.

The run up in oil prices was also significant in that it revives fears about whether it will drive up inflationary pressures enough to limit the Federal Reserve's ability to cut interest rates further, even if the economic growth deteriorates enough to warrant more cuts.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than 5 to 1 on volume of 1.79 billion shares. On the Nasdaq, decliners topped advancers 5 to 1 on volume of 2.41 billion shares.

Stock declines were broad based, with all 30 Dow stocks slumping.

Source - CNNMoney

Gold prices: Nowhere to go but up

The dollar is declining and inflation is lying in wait. Market conditions are waving red in the face of gold bulls.

So far this year, gold prices are up about 22 percent to nearly $750 an ounce - helped by the declining dollar and growing interest from institutional investors.

And given a confluence of factors, including heightened seasonal demand, analysts believe that prices for the precious metal will move higher still and are poised to shatter its all-time record.

Historically, gold has been considered a safe-haven for investors jittery about inflation or the economy.

With skittish investors diversifying their portfolios with commodities, demand for gold has shot up. During the summer's market meltdown, prices remained modestly higher compared to the start of the year before moving higher in recent weeks. Just last week, gold hit $744.80 an ounce - its highest level in 27 years.

Many analysts say the biggest driving factor has been the weakening dollar. A weaker greenback makes gold, which is priced in dollars, more attractive to buyers outside the United States.

At the same time, worries about inflation have also stoked gold prices, according to Jon Nadler, an analyst with Kitco.com.

Indeed, gold typically attracts investors looking for a hedge against inflation. That factor has become especially important now with oil prices near record highs and after the Federal Reserve cut interest rates last week for the first time in four years.

And gold could find even more support at the consumer level. Typically, the period from September through year's end sees demand for gold climb in the United States amid the holiday shopping season. Demand is also high in India, the world's largest consumer of gold, because the next few months are a popular time for weddings and mark the celebration of the Hindu new year.

Of course, if interest by institutional investors or hedge funds wanes or consumer demand for jewelry slackens amid weakened consumer spending, gold prices could move right back down, according to experts.

How high?

By some analysts' estimates, gold prices are headed for $750 an ounce by the end of the year.

Peter Spina, an analyst with GoldSeek.com, speculated the price could even top its all-time high of $850, set in January 1980.

Source: CNNMoney.com

Dollar drops after Fed cuts more than expected

The dollar fell against its major counterparts Tuesday, hitting a new record low against the euro, after the U.S. Federal Reserve cut its benchmark federal funds rate more than many investors had expected, thereby lowering the return on dollar-denominated assets.

The central bank cut the fed funds rate for the first time in more than four years to 4.75% from 5.25%, and also cut its discount rate by half a point. Most economists and investors had expected the Fed to trim its benchmark federal funds rate at least 25 basis points, with some predicting the 50-basis point reduction.

The dollar index, which tracks the greenback against a basket of six major currencies, was at 79.375, down from 79.645 before the announcement.

The pound sterling was at $2.0122, compared to $1.9982 earlier.

The dollar was up at 115.65 yen, down from 115.80 yen earlier.

While lower interest rates are dollar-negative in the long term, rallying stock prices after the Fed's policy decision provided daily support for the U.S. currency Tuesday.

"Expect further dollar weakness in the days to come and expect further strength in the stock market and carry trades," said Kathy Lien, chief strategist at Forex Capital Markets. Carry traders refer to the practice of borrowing funds in lower-yielding currencies and investing them in higher-yielding ones.

Stocks were trading solidly higher Tuesday, and surged after the Fed's announcement. See Market Snapshot.

Crude-oil futures were higher after the Fed move, after earlier touching a new front-month contract high of $81.50 a barrel on hopes that the expected interest rate cut will boost energy demand. See Futures Movers.

Source - Marketwatch.com