Amid a flurry of late-dayheadlines surrounding the future Citigroup, Wall Street ended the week with triple-digit declines as the markets were spooked by news that the U.S. unemployment rate soared to the highest level in 16 years last month as the economy deteriorated further.
Today's Market
The Dow Jones Industrial Average lost 143.28 points, or 1.64%, to 8599.18, the S&P 500 fell 19.38 points, or 2.13%, to 890.35 and the Nasdaq Composite dropped 45.42 points, or 2.81%, to 1571.59. The consumer-friendly FOX 50 sank 12.62 points, or 1.84%, to 675.02.
Friday's losses send the Dow to a three-day losing streak that has erased more than 400 points from the benchmark index as Wall Street has been struggled to ignore the latest dire economic reports.
All told, the Dow tumbled 435 points, or 4.82%, this week, its steepest weekly decline since late November. Even with those losses, the index is still up 13.86% since hitting 5 1/2 year lows on November 20.
"The market was a little overbought. We needed to give some back. I guess it’s not the end of the world," NSYEtrader Ted Weisberg of Seaport Securities told FOXBusiness.
Aside from the job-loss figures, the markets were also reacting to news of a possible breakup at Citigroup (C), a potential successor to Yahoo!(YHOO) CEOJerryYang and new earnings guidance from big-name companies like Chevron (CVX), Merck (MRK) and Best Buy (BBY).
Nearly all 30 components of the Dow closed in the red, led by Citi and Alcoa (AA). Financial giants JPMorganChase (JPM) and Bank of America (BAC) also ended sharply lower. On the upside, defensive names like Wal-Mart (WMT) and Johnson & Johnson (JNJ) saw minor gains.
The Nasdaq Composite suffered much steeper losses than the broader market as the tech sector lost 2% of its value. Tech stocks like eBay (EBAY) and Logitech (LOGI) declined even further, offsetting gains from the Apollo Group (APOL) and BlackBerry maker Research in Motion (RIMM).
Meanwhile, late Friday Citigroup announced the departure of Rubin, the former Treasury secretary that joined the bank in 1999. Also, The WallStreet Journal reported Citi is in talks to sell its prized Smith Barney brokerage and asset-management unit, possibly as a joint venture withMorgan Stanley (MS). Citi may also look to unload its Mexican retail-banking business, Grupo Financiero Banamex, which could interest JPMorganChase(JPM), the Journal reported.
All eyes Friday were on the Labor Department's monthly employment report, which revealed that employers slashed 524,000 jobs last month, bringing the unemployment rate from 6.7% to 7.2% -- the highest level since former President Bill Clinton took office in January 1993. The report marks the 12th consecutive month of job declines, corresponding with when the current recession began in December 2007.
While it would be hard to argue that the latest labor figures are anything but dismal, the markets had been bracing for the worst and economists had predicted the results. At the same time, consensus forecasts called for a more modest rise to the unemployment rate to a level of 7%.
The government also said the U.S. lost 2.6 million jobs last year, including 2 million in the final four months alone, marking the worst labor year since 1945. November's labor figures were even worse than first estimated as the government said employers slashed 584,000 jobs, the most since 1974.
All signs point to the unemployment rate continuing to rise as scores of companies such as aluminum giant Alcoa (AA), oil-services firm Schlumberger (SLB) and Walgreen (WAG) have all unveiled mass layoffs since 2009 began.
On the energy front, crude oil futures remained under pressure, nearly sinking below the $40 per barrel. The price of crude ended down 87 cents, or 2.09%, to $40.83 per barrel, a fresh 2009 low. It was an ugly week for crude as the commodity lost 11.89% of its value, its third declining week of the past four.
Corporate Movers
GMAC LLC, the financial arm of General Motors (GM), announced the departure of Chairman Ezra Merkin, whose hedge fund lost billions of dollars on investments withBernard Madoff, the alleged Ponzi scheme mastermind.Merkin's resignation is effective Friday and his seat will be filled on an interim basis by Jeffrey Lomasky, chief financial officer of GMAC majority owner Cerberus Capital Management.
Yahoo! (YHOO) is close to naming a new chief executive and former Autodesk (ADSK) CEO Carol Bartz is in the running, the Journal reported. An announcement could come as early as next week, the newspaper reported.
Boeing (BA) announced plans to slash 4,500 jobs, or 7% of its plane unit employees. The layoffs are expected to focus on Boeing's Seattle-area plants and take place between April and June.
Lehman Brothers, which became the largest company to file for bankruptcy ever last September, has reached a deal to allow its buyout arm to spin out into an independent arm to be called Lehman Brothers Merchant Banking, the Journal reported.
Chevron (CVX) warned its fourth-quarter earnings will likely be significantly worse than the prior quarter due to the collapse in oil prices. The second-largest U.S. oil and gas company didn’t give any further guidance.
Schlumberger (SLB), the world’s largest oilfield services provider, released plans to slash 1,000 jobs, or 5% of its workforce.
Best Buy (BBY) narrowed its full-year earnings guidance and said its December same-store sales slid 6.5%. The electronics retailer sees earnings in the range of $2.50 to $2.70 per share, compared to analyst estimates for $2.59 a share.
Merck (MRK) backed its 2009 sales and earnings guidance despite the ongoing recession. The pharmaceutical giant also said the FDA issued a second complete response letter concerning its Gardasil drug, which it will respond to in the fourth quarter of 2009.
KB Home (KBH) lost $307.3 million, or $3.96 per share, in the fourth quarter as its revenue plummeted 56% to $919 million.
Advanced Micro Devices (AMD), unveiled plans to build the world’s fastest graphics supercomputer using a process called “cloud” computing.
Global Markets
European markets ended solidly lower as the Dow Jones Euro Stoxx 50 slid 1.19% to 2486.59 and Germany's DAX lost 1.97% to 4783.89.
In Asia, Japan's Nikkei 225 declined 0.45% to 8836.80 and Hong Kong's Hang Seng fell 0.27% to 14377.44.
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