RTRS: Wall Street slides as Tyco and Alcoa feed economic worries
By Kristina Cooke
NEW YORK (Reuters) - Stocks fell on Tuesday as faltering demand at aluminum maker Alcoa and a dismal outlook from Tyco International showed the global economic slowdown is deepening.
Signs of weakness in China's economy further fed worries about the breadth of the slowdown, slashing investors' appetite for risky assets.
Selling was widespread, with commodity-related shares tumbling as resources ranging from oil to silver were stung by fears that the economic gloom will curb demand and as the U.S. dollar firmed.
"Reality is setting in that we are in a recession. It's almost like an endless abyss for the market -- it's sell first, ask questions later," said Ryan Detrick, technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) shares shed 7 percent after the company slashed a further 350,000 tonnes of aluminum-making capacity worldwide, blaming faltering global demand.
Industrial conglomerates slid after Tyco International Ltd (TYC.N: Quote, Profile, Research, Stock Buzz) warned fiscal-year profit would be well below Wall Street's forecasts due to the downturn and the stronger dollar.
Adding to the sour mood, Starbucks Corp (SBUX.O: Quote, Profile, Research, Stock Buzz) provided more evidence that consumers are cutting back in a harsh economic environment. The coffee chain operator's stock fell 2 percent after its profit and outlook disappointed investors and it cut plans for to open new shops.
"All the different bailout plans have only given stocks fleeting boosts and that is beginning to wear on people. And for the consumer, Christmas is not going to be a 'feel good' time of year at all," Detrick said.
The Dow Jones industrial average .DJI dropped 176.58 points, or 1.99 percent, to 8,693.96, while the Standard & Poor's 500 Index .SPX shed 20.26 points, or 2.20 percent, to 898.95. The Nasdaq Composite Index .IXIC slid 35.84 points, or 2.22 percent, to 1,580.90.
Alcoa's shares dropped 7.1 percent to $10.94 on the New York Stock Exchange, while Starbucks' shares lost 2.1 percent to $9.99 on the Nasdaq.
Among industrial companies, Tyco's shares fell 14.2 percent to $21.74, while 3M's (MMM.N: Quote, Profile, Research, Stock Buzz) shares were among the biggest drags on the Dow, falling 4 percent to $62.38.
FLIP OPEN PANDORA'S BOX
Credit card company American Express Co (AXP.N: Quote, Profile, Research, Stock Buzz) fell 6.6 percent to $22.40, a day after it said it won approval to become a bank holding company, in a move that would give it more access to government money.
General Motors (GM.N: Quote, Profile, Research, Stock Buzz) slid for a fifth straight day, down 13.1 percent at $2.92 as investors worried about the chances of the U.S. auto sector securing a desperately needed cash infusion from the government.
"It's opening up Pandora's Box. American Express, they're asking for money, GM is asking for money. People are starting to realize this bailout is going to be much more expensive than originally thought," Detrick said. "Everybody's asking for a handout, but who is going to foot the bill?"
The market's slide puts it in a precarious position as investors had hoped November would mark the start of a sustained recovery after a disastrous October sent stocks to their lowest in more than five years.
Technology stocks were also hard hit. Google (GOOG.O: Quote, Profile, Research, Stock Buzz) slid 2.3 percent to $311.46 on Nasdaq after Goldman Sachs cut its price target and fourth-quarter revenue view for the Internet company.
In the latest sign of fallout from the economic upheaval, Chinese import growth slowed in October and inflation fell to a 17-month low as demand cooled.
Trading volumes were thin, with the bond market closed for the Veterans Day holiday.
Volume was low on the New York Stock Exchange, with about 1.23 billion shares changing hands, down sharply from last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.93 billion shares traded, also far below last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of slightly more than 4 to 1. On the Nasdaq, three stocks fell for every one that rose.
