Volatility slammed Wall Street again Tuesday as the reality hit investors that few industries are safe from the consumer spending slump — whether they're building homes, making cars or selling coffee. The Dow Jones industrial average fell about 177 points.
The market did bounce off its lows of the day after a media report that a BlackRock executive said a $30 billion Bear Stearns mortgage portfolio could be worth more than its market value suggests. And the government and the mortgage industry announced the largest moves yet to help homeowners renegotiate hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac.
Still, the market had much to contend with. Although the mortgage crisis that spawned the current downturn is being addressed, the economy remains extremely troubled.
At close the Dow Jones industrial average dropped 176.58, or 1.99 percent, to 8,693.96 after falling by more than 300 earlier. The blue chip index has not dipped below the 8,000 mark in trading since Oct. 10, but is down about 35 percent since the start of the year.
It's becoming clear that it's going to be hard to rely on the average consumer to pull the economy out of its downturn. Late Monday, Starbucks Corp. reported lower sales across the coffee chain, and early Tuesday, Toll Brothers Inc. posted a sharp drop in revenue and said it was too difficult to predict what the luxury homebuilder's profit would be next year.
Investors are also jittery as the nation's feeble automakers try to get a bailout from the federal government, much like the ailing insurer American International Group Inc. has. General Motors Corp., whose shares have plunged to 60-year lows, said late Monday it would cut 1,900 factory jobs on top of the 3,600 cuts it announced Friday.
There were no economic reports released Tuesday, since the government and bond markets were closed for Veterans Day. But investors didn't need government data to see that the economy's downward slide isn't over — the litany of troubling corporate news was enough. Wall Street has been anticipating grim results from corporate America, but it cannot gauge yet how bad they could get.
Business
The latest business news.
"We're in a situation where we really don't know how deep a recession we're in," said Jim Herrick, manager of equity trading at Baird & Co. "Until there's some clarity on the economy and clarity with earnings, we'll definitely be stuck in this trading range."
