MARKET SNAPSHOT: U.S. Stocks Fall Steeply As Financial Sector Weighs

U.S. stocks declined Wednesday after the biggest-ever drop in consumer prices and another gloomy housing report offered little cheer to investors already fretting about the fate of the Big Three automakers.

After climbing in and out of positive and negative turf, the major stock indexes fell decisively. The Dow Jones Industrial Average (DJI) slid 210.43 points, or 2.5%, to 8,214.32, with 28 of its 30 components trading lower.

Shares of General Motors Corp. (GM) paced the blue chips' decline, down 17.5%.

The chief executives of GM, Ford Motor Co. (F) and Chrysler returned to Capitol Hill for a second day to make their case for the government extending a bridge loan to their ailing industry.

"If one or more of the auto manufacturers were allowed to fail, it would likely bring additional volatility to credit, equity and foreign-exchange markets," said Alex Meister, currency analyst at Wachovia Corp.

The S&P 500 (SPX) fell 28.99 points, or 3.4%, to 830.13, and the Nasdaq Composite (RIXF) dropped 50.88 points, or 3.4%, to 1,432.39.

Financial shares fronted the losses, with shares of some of the nation's top life insurers shedding value on worries about their capital conditions as well as the status of their applications for investment from the federal government. .

Rivals Lincoln National Corp. (LNC) and Hartford Financial Services (HIG) were both slammed, with Lincoln National off 34.5% and Hartford Financial off 28.6%.

Both insurers have applied to the U.S. Office of Thrift Supervision to acquire individual S&Ls as a way of getting large capital infusions from the Treasury Department's $700 billion Troubled Asset Relief Program.

Volume on the New York Stock Exchange topped 557 million, and for every stock on the rise, nine were declining. On the Nasdaq, nearly 390 million shares traded, and decliners topped advancers more than 5 to 1.

The dollar gained, with an index (DXY) comparing the greenback against other major currencies up to 87.38 from 87.114 in late Tuesday trade. .

Oil dropped as U.S. inventory supplies increased, with crude for December delivery falling 37 cents to $54.02 a barrel. .

In other trade on the New York Mercantile Exchange, gold futures climbed, with the contract for December up $3.2 to $735.9 an ounce. .

Demand for gold coins and bars increased in recent months, even as gold futures fell far from record highs above $1,000 an ounce hit in March, according to a industry report. .

Data clouds

Earlier in the day, the Labor Department reported consumer prices dipped a record 1% in October, driven by an 8.6% drop in energy costs. .

"There's no relief in the beleaguered housing market," analysts at Action Economics said of the Commerce Department's estimate that new home construction fell to a record low in October.

And in a related report, the Mortgage Bankers Association said mortgage applications fell a seasonally adjusted 6.2% last week from the prior one, as lower interest rates on fixed-rate mortgages failed to stir prospective home buyers.

In comments early Wednesday, Federal Reserve Vice Chairman Donald Kohn said regulation is the best means of preventing another financial crisis.

At 2 p.m. EST, the Fed is slated to release the minutes from its last meeting at which the central bank cut rates by half a percentage point, with futures pricing in another cut of this size in December.

European stocks also fell, with banks getting hit for a third straight session.

In Asia, stocks closed mostly lower. .

On Tuesday, U.S. stocks ended higher after a run-up in the final hour of trade, with the Dow Jones Industrial Average striking its third advance in 10 sessions.

At Tuesday's close, the Dow Jones Industrial Average was down 9.65% in November, according to a preliminary report from the Dow Jones Indexes. Year-to- date, the blue-chip index was down 36.49%.


Source: http://money.cnn.com/news/newsfeeds/articles/djhighlights/200811191245DOWJONESDJONLINE000750.htm