The markets collapsed Wednesday under the weight of plunging retailers and free-falling financials, sending the Dow to its third consecutive losing session. Banking giant Citigroup hit an all-time low and crude oil tumbled to levels unseen since January 2007.
The latest carnage on Wall Street was preceded by an ominous warning from Best Buy of a "seismic shift" in consumer behavior.Later, investors responded badly to Treasury SecretaryHenryPaulson's announcement that the $700 billion rescue package won't be used for troubled assets after all.
Today's Market
The Dow Jones Industrial Average lost 411.30 points, or 4.73%, to 8282.66, the broader S&P 500 fell 46.65 points, or 5.19%, to 852.30 and the Nasdaq Composite slid 81.69 points, or 5.17%, to 1499.21. The consumer-friendly FOX 50 fell 35.42 points, or 5.15%, to 652.16.
The markets have ended in the red in five out of the past six days, carving roughly 1,350 points from the Dow in the past week alone. The recent declines leave the benchmark U.S. index just a few hundred points away from its lowest level of the economic crisis.
"This is not a pretty picture right now. There is clearly investor concern that we may retest the lows," MichaelJames, senior equity trader at WedbushMorgan Securities told FOXBusiness.
All but one of the 30 components of the Dow lost at least 1% on Wednesday, led by American Express(AXP), which is reportedly seeking $3.5 billion from the government. Citigroup (C) plunged below $10 a share for the first time ever and General Electric (GE) fell sharply as well. The index's only winner was GeneralMotors(GM), a company trading at 62-year lows and in need of a massive government bailout to avoid a potential bankruptcy filing.
The latest pessimistic comments on the economy came from Best Buy (BBY), which Wednesday morning cut its fiscal 2009 profit forecast and warned same-store sales could plunge as much as 15% in November following a 7.6% decline last month.
“Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen," Best Buy CEOBrad Anderson said in a statement.
The lower guidance from Best Buy comes just days after rival retailer Circuit City (CC) filed for bankruptcy protection. Best Buy's news weighed heavily on other retailers as Amazon.com (AMZN) and RadioShack (RSH) both plunged to 52-week lows on Wednesday.
Markets Spooked by TARPChanges
The markets were anything but soothed by Paulson, who on Wednesday disclosed major changes to the government's $700 billion financial rescue package, called the Troubled Asset RescueProgram.
Paulson said the government no longer believes purchasing banks' toxic assets is "the most effective way to use TARP funds" -- even though that was the way the massive rescue package was sold to the public and lawmakers.Instead, the government will continue its current use of the funds to inject capital into financial companies.
"I think that change made people a little more uncomfortable about the financials in general in terms of their stability. I think that’s why you are seeing such dramatic weakness in the financials today," said James.
That weakness was most obvious in shares of Citi and Goldman Sachs (GS), both of which plummeted to fresh lows.
"Our financial system remains fragile in the face of an economic downturn here and abroad, and financial institutions' balance sheets still hold significant illiquid assets. Market turmoil will not abate until the biggest part of the housing correction is behind us," said Paulson.
Paulson did not endorse using the TARP funds to help rescue Detroit's Big Three auto makers -- Ford(F), GeneralMotors (GM) and privately-held Chrysler LLC -- that are burning cash at precarious rates.Instead, he said Congress could take legislative action to authorize the use of federal aid.
Shares of the auto makers rose anyway as House Speaker Nancy Pelosi has embraced the idea of providing help to the auto makers in a lame-duck session of Congress next week to prevent layoffs that could reach into the millions and further weaken the fledging economy.The executives of the Big Three auto makers and the United Auto Workers union are expected to testify on Capitol Hill on November 18, FOXNews has learned.
Crude Slide:Next Stop $50?
Meanwhile, crude oil futures sank to their lowest levels in 22 months Wednesday despite a new report from the International Energy Administration warning global supplies won't keep up with growth without infrastructure investments. The price of a barrel of crude ended $3.17 lower to $56.16 -- the lowest level since January 2007.
Crude futures, which have fallen 10% since Monday, are now off by 61% from all-time highs of $145 a barrel set in July. While consumers may cheer the plummeting energy prices, they are a stark reminder of expectations the economy will contract further in the months to come.
Corporate Movers
American Express (AXP) is seeking roughly $3.5 billion under the government’s rescue plan to counter slower consumer spending and rising defaults, The Wall Street Journal reported. It’s not clear if the application came before or after AmEx converted to a bank-holding company on Monday, the newspaper reported.
Anheuser-Busch (BUD) shareholders signed off on the beverage giant's $52 billion deal to be sold to Belgian-Brazilian rival InBev (INBVF). Despite the current conditions, InBev said the deal, which still needs regulatory approval, remains on track to close by the end of the year. The new company, which is to be called Anheuser-Busch InBev, would be the world's largest brewer.
Macy's (M) reported a narrower-than-expected non-GAAP loss in the third quarter and backed its recently-lowered 2008 guidance. The department store operator lost 8 cents per share on an adjusted-basis, well above the 19 cent per share loss analysts expected. Macy’s said sales slumped 7% to $5.5 billion.
Goldman Sachs (GS) CEO Lloyd Blankfein told investors the company’s strategy won’t change under its new status as a bank-holding company. Goldman’s shares have plummeted in recent days on fears its new status will dampen its appetite for risk that has led to enormous profits in years past.
Microsoft (MSFT) is nearing a deal to pay up to $650 million over five years to become the default search engine on Verizon Wireless phones, The Wall Street Journal reported. Search leader Google (GOOG) is also competing for the deal with Verizon, which is a joint venture of Verizon Communications (VZ) and Vodafone (VOD).
World Markets
Major global indexes slumped across the board. In Europe, the Dow Jones Euro Stoxx 50 Index, which tracks the 50 largest companies on the continent, fell 82.87 points, or 3.34%, to 2400.74.London's FTSE 100 Index slid 64.67 points, or 1.52%, to 4182.02.
In Asia, Japan's Nikkei 225 Index fell 113.79 points, or 1.29%, to 8695.51 while Hong Kong's Hang Seng Index ended down by 101.81 points, or 0.73%, to 13939.09.
Markets are battered again
Government to Borrow Record $550B to Fund Rescue Programs
