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Current DateTime: 04:27:37 28 Nov 2009
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Current DateTime: 04:27:37 28 Nov 2009
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Current DateTime: 04:27:38 28 Nov 2009
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By: CNBC.com With Wires | 04 Dec 2007 | 04:42 PM ET
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Stocks closed lower as investors worried that the credit crisis will continue to batter the financial sector and wider economy.

Stocks were hurt by a Treasury official's prediction of a "long and slow" recovery from the current credit problems as well as a reduced earnings outlook for Wall Street banks.

Shares of financial companies, including American Express [AXP  Loading...      ()   ] and Bank of America [BAC  Loading...      ()   ] led declines. Another drop in crude oil prices also weighed on shares of energy companies, including Exxon Mobil [XOM  Loading...      ()   ].

Major U.S. Indexes
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The market also is awaiting Friday's November employment report to see if it bolsters the case for further rate cuts by the Federal Reserve. Even though comments from key Fed officials, including Chairman Ben Bernanke, have boosted expectations for a reduction in rates, investors are unsure about the size of the cut when the Fed meets Dec. 11.

"People are trying to figure out what's going to happen with the Fed--will it be 25 or 50 basis points," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois. "So many people are thinking 50 basis-point cut, which will help the market."

JPMorgan Chase cut its earnings estimates on four big investment banks citing concern about write-downs for loan losses, a slowdown in mergers and takeovers, and reduced opportunities for investment banks to generate other fees.

Shares of Goldman Sachs, Lehman Brothers, Morgan Stanley and Merrill Lynch all fell after J.P. Morgan cut its earnings estimates for the four. Shares of other banks, including JPMorgan Chase, also fell.

Financials Continue Fall
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Goldman Sachs cut its forecast for 2007 and 2008 operating earnings per shares for S&P 500 companies. On Monday, Merrill also slashed its 2008 forecast for the S&P 500 universe.

Elsewhere, shares at Dow Chemical [DOW  Loading...      ()   ] dropped after it announced it would shut down a number of plants and eliminate 1,000 jobs, while taking a charge of up to $600 million for severance costs and asset writedowns.

And General Motors [GM  Loading...      ()   ] said it was pursuing a stake in Russian automaker OAO Avotvaz in an effort to grow by investing in an emerging market, according to a Wall Street Journal report.

Corporate news

Two airlines issued warnings of trouble ahead.

Southwest [LUV  Loading...      ()   ] said it is concerned about the effects that the slowing economy will have on business next year and will reduce capacity, while Delta [DAL  Loading...      ()   ] said it is being hurt by rising transportation costs and said it would post a fourth-quarter loss. Boeing [BA  Loading...      ()   ] was among the biggest losers of Dow components.

Renewable energy companies were among those that had good days as passage neared of a law that would clamp down on automobile fuel efficiency. The biggest gainer of the group was Solarfun Power Holdings [SOLF  Loading...      ()   ].

Small-cap Jamba [JMBA  Loading...      ()   ], maker of the popular Jamba Juice drinks, also was strong on the upside on news of a joint venture with Nestle.

Stocks sharply to the downside included troubled subprime lender Novastar [NFI  Loading...      ()   ], which surrendered gains it posted Monday, and Phillips Van Heusen [PVH  Loading...      ()   ], which dropped on a weak forecast.

Also, Lehman Brothers said it would buy assets from Dutch specialist market maker Van der Moolen, including its New York Stock Exchange portfolio.

On the earnings front, AutoZone [AZO  Loading...      ()   ] quarterly earnings rose sharply, helped by the sale of higher-profit products. The auto parts retail chain easily beat estimates and saw its shares rise 5.5 percent premarket.

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Current DateTime: 01:08:03 28 Nov 2009
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