U.S. stocks were heading lower as the market struggles to find buyers following Wednesday's major sell-off and a mixed bag of economic reports. Traders, awaiting a flurry of earnings reports, weighed news that Citigroup (C) reported a narrower-than-expected loss.
Trading has been extremely choppy since the outset, reports S&P MarketScope.
Data released Thursday showed a flat reading on the consumer price index and a 2.8% plunge in industrial production for September, a 16,000 drop in weekly jobless claims, and a plunge in the October Philadelphia Fed index to minus 37.5 from positive 3.8.
Global markets were lower, but Swiss banks Credit Suisse (CS) and UBS (UBS) were higher on the news Switzerland's two largest banks got emergency funding from the Swiss government and other parties to shore them up against the financial crisis.
Bonds were mixed. The dollar index was higher. Gold and crude oil futures were lower.
On Thursday at 11:10 a.m. ET, the Dow Jones industrial average was down 312.86 points to 8,265.05. The S&P 500 index dropped 34.77 points to 873.07. The Nasdaq composite index fell 47.78 points to 1,580.55.
Thursday's action follows Wednesday's declines of 7.87% for the Dow -- its largest percentage drop since the 1987 stock market crash -- 9.03% for the S&P 500, and 8.47% for the Nasdaq. The market has almost wiped out the gains from Monday's historic rally.
The U.S. VIX equity volatility index marked fresh highs above 77.0 Thursday on back-to-back steep declines in equity markets. From Tuesday lows near 53.65, the market's favored "fear gauge" has surged 23.75 points to highs of 77.40.
In economic reports Thursday, the October Philadelphia Federal Reserve survey of third-district manufacturers showed a plunge in business conditions to negative 37.5 from positive 3.8 in September. The market consensus was for a drop to minus 10. Even the expectations index fell into negative territory for the first time since 2001, to negative 4.2 from plus 30.8.
"The huge contraction in general business activity in the region is consistent with increasing signs that the latest turmoil in the financial markets was the straw that broke the economy's back," says Action Economics.
Industrial production plunged 2.8% in September, reflecting hurricanes, the Boeing (BA) strike, and weaker capital spending. The drop was much worse than the 0.8% expected by the market. Manufacturing production fell 2.6%, with aerospace off 16.6% because of the Boeing strike. Machinery output was down 3.3%. Sharp declines in petroleum (down 9.2%) and chemicals (down 3.0%) were caused by hurricane-related shutdowns in the Gulf of Mexico. Similarly, the 7.8% drop in mining output was caused by the hurricanes' impact on production. Utility output was up 2.2%, rebounding from a 3.1% August drop because of more normal temperatures. Industrial production is down 4.5% from a year ago, and manufacturing output is down 4.8%. Capacity utilization plunged to 76.4% from 78.7%. In manufacturing, utilization fell to 74.5% from 76.6%.
U.S. CPI was flat in September, while the core rate, which excludes food and energy prices, inched up 0.1%. In August, the headline CPI dipped 0.1% while the core rate rose 0.2%. On a year-over-year basis, CPI slowed to a 4.9% pace in September (compared to 5.4% previously), and the core rate was steady at 2.5%, both still well above the Federal Reserve's comfort zone, according to Action Economics.
Energy prices dropped 1.9% after a 3.1% decline in August. Gasoline prices fell 0.6%. Transportation costs declined 0.6%. Housing costs fell 0.1%, with the owners equivalent rent measure up 0.2%. Food and beverage prices rose 0.6% and are up 6.0% year-over-year. Apparel prices slipped 0.1%. Medical care costs rose 0.3%.
U.S. jobless claims fell 16,000 to 461,000 in the week ended Oct. 11, from a revised 477,000 last week (478,000 previously). The prior week's figure was the highest since September 2001, though claims have been distorted recently by the hurricanes on the Gulf Coast last month, says Action Economics.
November NYMEX crude fell to $70.55 per barrel, down $3.99 on the day, following the EIA inventory data which showed a 5.6 million barrel rise in crude oil stockpiles. Wall Street had been expecting a 2.0 million barrel increase.
