Washington Post Staff Writer
Friday, December 12, 2008; Page D05
Wall Street stumbled yesterday as more poor economic data pointed to a deepening recession and a bailout of the auto industry remained in limbo at the end of trading.
Trading was mostly subdued until the end of the day, when it returned to the volatility that has become the recent norm. The Dow Jones industrial average slid more than 100 points during the last hour of trading, closing down 2.2 percent, or 196.33 points, at 8565.09. The Standard & Poor's 500-stock index lost 2.9 percent, or 25.65 points, to 873.59. The tech-heavy Nasdaq composite index was down 3.7 percent, or 57.60 points, to 1507.88.
Financial stocks took some of the biggest hits after U.S. Bancorp warned it is setting aside more than $1 billion to cover bad loans, pulling down its stock 10.2 percent to $24.85 a share. Bank of America fell 10.7 percent to $14.91, then the company announced after markets closed that it would shed up to 35,000 positions over the next three years.
The future of U.S. automakers also weighed heavily, analysts said. General Motors and Chrysler have said they need cash before the end of the month to avoid collapse.
GM's stock fell 10.4 percent to $4.12 a share, while Ford was down 10.8 percent to $2.90 a share. Chrysler is privately held.
Also, new government data reinforced concerns that the worst of the recession is still ahead.
U.S. exports fell 2.2 percent to $151.7 billion in October, the third straight monthly decline in the value of goods and services that U.S. companies sell abroad, according to Commerce Department data. The number of people submitting jobless claims grew by 58,000 to a seasonally adjusted 573,000 last week, according to the Labor Department. That is a 26-year high and surpassed analysts' expectations.
Meanwhile, the falling value of the dollar and expectations that the Organization of the Petroleum Exporting Countries will cut production sent crude oil prices up 10.3 percent to $47.98 a barrel on the New York Mercantile Exchange. That is far from its July peak of $147 a barrel, but marks a recovery from recent sell-offs that dropped prices to their lowest point in more than three years.
The International Energy Agency said demand for crude oil will fall 0.2 percent this year, the first contraction in more than 20 years. Demand will begin to grow again in 2009 if the global economy begins to recover as expected, the report said.
That was a more optimistic view than many traders had expected, analysts said. "Even though it was down, it was not down as much as people thought," said Phil Flynn, an oil analyst at Alaron Trading in Chicago.
