Scary reports on consumption led to sharp late-day selling on U.S. equity markets Friday. Aside from the Census Bureau's report on October retail sales, which showed sales slowed for a fourth consecutive month and by the most on record, corporations announced lay-offs and slashed profit estimates based on weaker global consumption.
Cell phone maker Nokia dropped about 10% in heavy trading after slashing its fourth-quarter profit guidance citing the "sharp pullback in global consumer spending."
Sun Microsystems, the server and software maker, said it would be laying off up to 6,000 workers, or 18 % of its global staff, as a slump in the sale of high-end servers has hammered the company.
JCPenney reported this morning that its profit declined as same-store sales dropped 10%. The department-store operator also delivered a fourth-quarter forecast that was well off analysts' estimates and said that challenging conditions would persist through 2009.
At the close of floor trading on the NYSE, the DOW was on 8497.31 after falling 337.94 points (-3.82%). The S&P, which is now losing nearly 41% for the year and is headed for its worst year since 1931, closed on 873.29, down 38.00 points (-4.17%) while the NASDAQ finished the day's trading on 1516.85 with a loss of 79.85 points (-5.00%). Bonds were bought heavily as stocks were sold. The yield on the 2-year note fell 3.7 basis points to 1.914% while yield on the 10-year note lost 14 basis points to 3.708%. The dollar traded in risk-aversion mode, gaining 0.98% on the euro, 0.73% on the pound and 2.69% on Australia's dollar while it fell 0.84%% against the yen.
Crude oil for December delivery was last trading down $1.95 (-3.35%) to $56.29 per barrel.
Gold for December delivery had a big day, gaining $42.20 (5.99%) to $747.10 per ounce.
Banks have already gotten into the fun and firms like Goldman Sachs and American express have now become banks just so they can qualify for money under the Treasury's Troubled Asset Relief Program (which actually is no longer a program which will deal with troubled assets). Today, Hartford Financial applied to become a savings and loan holding company. Now, three of the Nation’s largest cities have asked the U.S. Treasury for billions of dollars to shore up pension systems, cover short-term borrowing needs and boost infrastructure spending.
In a letter to Treasury Secretary Henry Paulson Friday, the mayors of Philadelphia, Phoenix and Atlanta asked for the creation of a $50 billion fund to spur infrastructure investments as well as for loans to cover unfunded pension liabilities and to address cash flow crunches amidst tight credit markets. “Cities will disproportionately bear the brunt of the dislocations caused by the credit crisis and a contracting economy unless the federal government steps in to assist us,” the mayors wrote.
We've apparently come a long way from the 1970's when President Gerald Ford, in response to New York City's request for funding to cover its own fiscal crisis, told the city to "drop dead" according to a famous Daily News headline at the time.
There was no word on whether the cities involved were planning to become bank holding companies in order to qualify for Treasury funds.