Stocks continue descent
The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) are continuing to tumble on weaker-than-expected durable goods orders and lackluster financial firm news, magnifying investors’ already present concerns surrounding a possible economic slowdown.
News of the assassination of former Pakistani Prime Minister Benazir Bhutto only added to the unsettling economic data, shaking the markets.
At 1:36 p.m. ET, the small-cap index was down 15.14 points, or 1.9%, to 781.89. The Dow was down 151.28 points, or 1.12%, to 13,400.41.
Durable goods orders for the month of November edged up a less-than-forecasted 0.1% from October’s 0.4% decline. Economists were forecasting an increase of 2.5%.
In corporate news, Goldman Sachs issued a note late Wednesday speculating that financial juggernaut Citigroup Inc. (NYSE: C) might have to slash its dividend by 40% in light of now greater-than-forecasted write-downs for bad bets on collateralized debt obligations. Goldman is now projecting write-downs in the neighborhood of $18.7 billion, up from the investment bank’s previous estimate of $11 billion.
In related news surrounding the unfolding of the credit crisis, Fitch Ratings put 205 residential mortgage-backed securities backed by bond insurers, including MBIA and Ambac Financial Group, on review for a downgrade.
The day’s negative news overshadowed U.S. consumer confidence, which rose unexpectedly in December. The Conference Board's index of confidence increased to 88.6, the first gain in five months, from a revised 87.8 the prior month. November's number was the lowest in two years.
Bhutto’s assassination, added to energy trader’s worries concerning instability in the Middle East, caused a sharp rise in crude oil prices. Additionally, energy traders are also anticipating the release of weekly data that are expected to show a decline in U.S. crude inventory. A barrel of crude oil shot up $1.38 to $97.35 in mid-day trading.
The day’s news caused investors to take shelter in safe havens pushing up gold prices and pushing Treasury-bond yields lower. The 10-year note’s yield stood at 4.22% mid-day, while gold traded up $4 to $833.70 per February contract.
Biggest percentage gainers:
• American Dental Partners, Inc. (ADPI), up 75.4% to $9.68 on news that it settled a lawsuit with PDG, a Minnesota-based doctor group.
• Document Sciences Corp. (DOCX), up 75.2% to $14.43 on news that EMC Corp. will buy the company for about $85 million.
• China BAK Battery, Inc. (CBAK), up 27.8% to $6.20.
Biggest percentage losers:
• China Technology Development Group Corp. (CTDC) down 11.9% to $8.72.
• Crystal River Capital Inc. (CRZ), down 12.2% to $15.15.
• Sterling Banks, Inc. (STBK), down 11% to $6.65
