Monday, 17 November 2008

Wall St falls as Citi, Japan news deepen worries

NEW YORK (Reuters) - U.S. stocks slid on Monday as the global economic outlook worsened, with Japan becoming the latest major economy to slide into recession and Citigroup Inc. revealed plans to slash 15 percent of its workforce.

Contributing to the dreary economic picture, a Philadelphia Federal Reserve Bank survey showed private-sector economists believe the U.S. economy fell into a recession last spring that will last 14 months, with the economy contracting sharply this quarter.

Japan, the world's second-largest economy, reported data showing that it was in recession, adding to jitters on the deepening global deterioration. The lack of any concrete stimulus plans over the weekend from a summit of 20 of the world's largest economies further undermined investor confidence.

"We've got to brace ourselves for a pretty ugly economy for the next six months," said John Forelli, portfolio manager at Independent Investments LLC in Boston.

Financials were a weight on the market after Citi announced plans to cut 52,000 jobs by early next year, Chief Executive Vikram Pandit's latest attempt to return the company to profitability and strengthen its share price. The move comes on the heels of 23,000 jobs eliminated in January and September.

The Dow Jones industrial average slid 79.49 points, or 0.94 percent, to 8,417.82. The Standard & Poor's 500 Index tumbled 6.79 points, or 0.78 percent, to 866.50. The Nasdaq Composite Index dropped 14.07 points, or 0.93 percent, to 1,502.78.

But General Motors Corp was among the advancers on the Dow, rising 6.0 percent to $3.19, as Congress prepares to debate a bailout of the American auto industry. The White House said it will continue to work with Republican lawmakers to determine if help can be extended to the ailing industry this week.

Elsewhere on the Dow, Alcoa's shares slumped 8.5 percent to $9.92 after UBS cut its rating on the company to "neutral" from "buy," citing uncertainty in the aluminum market.

Investors also dumped technology stocks seen vulnerable to a global downturn and reduced business spending. Microsoft shares fell about 0.8 percent while shares of Apple Inc fell 0.7 percent.

Target Corp shares shed 1.5 percent after the retailer posted a nearly 24 percent drop in profit as the economic downturn curtails shoppers' from splurging on the discount retailer's trendy wares and make payments on its credit cards.

Wachovia Capital Markets cut its 2009 operating earnings estimate on the Standard and Poor's 500 Index to $78.30 per share from $86 per share, citing deterioration in global growth prospects.

Data that showed a key manufacturing gauge in New York state fell to yet another record low in November underscored the grim view of the economy.

The S&P financial index shed 2.4 percent, while shares of Citigroup, a Dow component, fell 2.1 percent to $9.32.

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