American stocks fell last week, sending the Dow Jones Industrial Average to a fourth straight weekly retreat, after profit outlooks weakened, home prices plunged and the government confirmed that the economy shrank the most since 2001.
MBIA Inc and Discover Financial Services slumped more than 10 percent, driving financial institutions to the biggest retreat in the Standard & Poor's 500 Index, following evidence the year-long recession is deepening. General Motors Corp fell 18 percent, despite an end-of-week rebound, as its debt was cut deeper into junk. Textron Inc, the maker of Bell helicopters and Cessna aircraft, lost 15 percent after saying profit this quarter will trail forecasts.
"The recession is going to be longer and more severe than most people anticipate, and I don't see a recovery in the stock market anytime soon," said Mark MacQueen, who helps oversee US$7 billion as co-founder of Sage Advisory Services Ltd in Austin, Texas. "It looks like 2009 is going to be a difficult year."
The S&P 500 declined 1.7 percent to 872.80 last week. The Dow slipped 63.56 points, or 0.7 percent, to 8,515.55. The Russell 2000 Index of small companies fell 2 percent to 476.77.
Fewer than 4.3 billion shares traded in the US on Friday, or 58 percent less than the three-month average. Only 3.64 billion shares changed hands on December 24, the least since December 26, 2003, as trading ended three hours early before Christmas.
The S&P 500 extended its 2008 slide to 41 percent. The National Association of Realtors said the median resale price of single-family houses dropped 13 percent last month, the most since records began in 1968 and probably the largest decline since the 1930s. The Commerce Department said the economy contracted by 0.5 percent in the third quarter as consumer spending fell the most in almost three decades. Initial jobless claims rose to 586,000, the most since November 1982.
Monsanto Co lost 5.5 percent to US$67.72 after Goldman Sachs Group Inc said the recession will hurt profit at the world's largest producer of seeds. Walgreen Co, the second-biggest US drugstore chain, sank 8.7 percent to US$23.82 after posting the slowest sales growth in at least 18 years.
"The market has accepted the fact that the recession is getting worse and we'll get a large hit to fourth-quarter GDP," said Michael Strauss, who helps manage US$40 billion at Commonfund in Wilton, Connecticut. "We're expecting job deterioration to continue because of what the economy is doing."
The retreat in the S&P 500 this year caused losses at all but six of the 1,601 US mutual funds that invest in stocks and have more than US$250 million in assets, according to data compiled by Bloomberg News. For 242 funds, the slump was at least 50 percent.
MBIA slipped 17 percent to a five-week low of US$4.19. The bond insurer, stripped of its AAA credit rating after straying from backing municipal debt into guaranteeing securities backed by subprime mortgages, has lost 78 percent this year.
Discover, the fourth-largest credit-card network, slid 10 percent to US$8.37, extending its 2008 loss to 45 percent. The S&P 500 Financials Index retreated 4.1 percent and has fallen 59 percent this year, the most in its 18-year history.
GM, the car maker poised to get at least US$9.4 billion in US aid, slid 18 percent to US$3.66 for the week.
(Shanghai Daily December 29, 2008)
