Dec 22, 2008 1:00 pm US/Pacific
Stocks Fall In Light Trade As Toyota Cuts Outlook
NEW YORK (AP) ―
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Traders work on the floor of the New York Stock Exchange moments after the opening bell Dec. 12, 2008 in New York City.
Spencer Platt/Getty Images
Wall Street began a holiday-shortened week with a moderate pullback Monday as investors recoiled at bleak news from
Toyota Motor Corp. and drugstore operator
Walgreen Co.
The
two companies — both viewed as better-positioned than many of their
peers — provided more evidence that even stronger companies are
struggling as consumers cut back their spending.
Walgreen's
profit fell 10 percent in its fiscal first quarter, due mostly to the
costs of opening more than 200 new stores, so the company said it will
slow down its expansion. Toyota, meanwhile, slashed its earnings
forecast for a second time, warning that it now expects to post an
operating loss for the fiscal year through March.
It
would be the Japanese automaker's first such loss since it began
reporting results in 1941, and underscores the challenges facing car
companies. Toyota's American rivals,
General Motors Corp. and Chrysler LLC, received a $17.4 billion lifeline from the federal government last Friday to stave off bankruptcy.
Monday's gloomy corporate news highlighted how weak the consumer is, said Kim Caughey,
equity research analyst at Fort Pitt Capital Group. That's a troubling prospect, she said, because it appears the U.S. economy cannot rely on
consumer spending to pull it out of its downturn.
"Even though mortgage rates are coming down, we don't see the consumer running out and buying that house," Caughey said.
On Tuesday, the Commerce Department reports on last month's
new home sales, while the
National Association of Realtors reports on existing home sales. Economists forecast that both pieces of data will show declines.
Analysts
pointed out, though, that trading volumes were very low on Monday, and
likely to stay that way throughout the week. So trading was choppy —
the Dow fell by as many as 207 points before paring its losses — and
the market's movements may not be indicative of its long-term direction.
"A truncated week is going to make it tough to generate any firm takeaways from trading," said Craig Peckham,
equity trading strategist at
Jefferies & Co. "I would expect to see sleepy volumes and a lot of people protecting positions going into year end."
Tax-loss selling — when investors sell securities at a loss to offset a
capital gains tax liability — might also contribute to the market's weakness until the year's end, Fort Pitt's Caughey noted.
According to preliminary calculations, the
Dow Jones industrial average
fell 59.42, or 0.69 percent, to 8,519.69, after briefly moving into
positive territory early in the session, tumbling, and then recovering
some of its losses.
Broader stock
indicators also finished lower. The Standard & Poor's 500 index
fell 16.25, or 1.83 percent, to 871.63, and the
Nasdaq composite index fell 31.97, or 2.04 percent, to 1,532.35.
The
Russell 2000 index
of smaller companies fell 11.19, or 2.30 percent, to 475.07. Smaller
companies tend to be more vulnerable to economic weakness than larger
companies.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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