Rippling through the market was Goldman Sachs' downgrade on U.S. brokerage firmsto "neutral" from "attractive." The firm said there simply aren't any catalysts to push the stocks higher in the coming months.
(What was driving the market today? Click on the video at left.)
Goldman analyst William Tanona said Citigroup and Merrill Lynch may be forced to take writedowns of $8.9 billion and $4.2 billion, respectively, and raise additional capital. He also added Citigroup to Goldman's "Americas conviction sell" list.
Bank of America announced plans to eliminate 7,500 jobs in the next two years as it completes its acquisition of Countrywide Financial. Its shares fell 6.8 percent, making it the second biggest decliner on the Dow today.
Goldman has fared better than many of its rivals because it's less exposed to the subprime mess. But Wachovia still downgraded Goldman to "market perform" from "outperform," citing a weak outlook for capital markets. Its shares dropped 4 percent.
Many of the financials were trading at a multiyear low: Citigroup was at a 10-year low, Merrill was at a five-year low, Bank of America was trading at a 7-year low and regional bank Wachovia was at levels not seen in about 17-18 years.
Goldman Sachs also cut GM to "sell" from "neutral", reducing its price target to $11 from $19. Traders took the cue and the pushed the stock down to $11.43 a share.
A little perspective: GM's close was the lowest since 1955, when Dwight Eisenhower was in the White House and Elvis was debuting on the Ed Sullivan show. The auto maker's market cap is now about $7 billion, putting it in the bottom 10 percent of the S&P 500 by market cap, and at half the market cap of cosmetics company Avon.
A slew of other Dow components were trading at single-digit multiyear lows, including American Express , UTX and 3M .
A pair of earnings reports from the tech sector after the closing bell Wednesday roughed up the sector today -- not because of the earnings but because of the weak outlooks.
Research In Motion, the maker of the Blackberry smart phone, reported a higher first-quarter profit Wednesday, but its shares dropped sharply in after-hours trading as the results and outlook fell short of analysts' expectations, and then tumbled more than 13 percent in today's session.
Software maker Oracle reported a higher quarterly profit, beating Wall Street estimates, as new software license revenue climbed 27 percent, but its shares fell more than 3 percent in premarket trading as its financial chief said the firm sees software license sales growth softeningin the current quarter. Its shares fell 5 percent.
In mergers and acquisitions news, Anheuser-Buschis expected to reject InBev's unsolicited $46.3 billion offer as too low and outline its own restructuring plan, the Wall Street Journal reported. InBev filed a lawsuit that is likely the first step toward making this a hostile takeover.
Lennar, the second-largest U.S. home builder, reported a smaller quarterly net loss as it cut expenses by 60 percent, but the results were worse than expected as deliveries and new orders tumbled.
Still to Come:
FRIDAY: Personal income and spending; consumer sentiment; KB Home earnings
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