Volatility kicked in again on Wall Street Tuesday,
as the reality hit 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 more than 200 points.
The market managed to briefly 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 in another
promising sign for mortgages, 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.
the market sold off again in late afternoon, acknowledging that
although the mortgage crisis that spawned the current downturn is being
addressed, the economy remains extremely troubled.
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
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.
“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.”
referred to the fact that the market has been giving back gains
recently — including a 248-point advance last Friday — as it tries to
recover from October’s heavy selling. In a similar fashion, the market
pared nearly all of its losses on the report that BlackRock President
Robert Kapito said a Bear Stearns mortgage portfolio is generating cash flow, but then quickly sank again.
In late afternoon trading, the Dow Jones industrial average
shed 212.34, or 2.39 percent, to 8,658.20 after falling by more than
300. 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.
Broader stock indicators declined as well. The Standard & Poor’s 500 index fell 25.80, or 2.81 percent, to 893.41; and the Nasdaq composite index dropped 45.77, or 2.83 percent, to 1570.97.
The Russell 2000 index of smaller companies fell 9.48, or 1.92 percent, to 483.62.