The stock market logged new multiyear lows during the session, and
closed at its worst level since the fourth quarter of 1996. Roughly 95% of the
companies in the S&P 500 finished with a loss.
Though losses were broad-based, financials were dealt the worst
blow. The sector fell 9.9% with particular weakness among diversified banks
(-16.5%) and other diversified financial services companies (-13.2%).
Moody's announced it is reviewing the
credit ratings of Bank of
Citigroup (C
1.02, -0.11), which is a Dow component, registered record lows by falling below
$1 per share.
Despite the weakness plaguing financial stocks, General Electric (GE 6.66, -0.03)
resisted much of the session's sweeping selling efforts. Concerns about the
health of the company's capital arm have made the stock perform as if it were a
financial holding. The company's CFO stated in a CNBC interview that GE does
not need capital, helping calm concerns for at least the time being.
Automakers continue to struggle amid stiff macro headwinds. General Motors (GM 1.86, -0.34), also
a Dow component, was hammered as fears of bankruptcy mounted after the
company's auditor expressed concerns about GM's viability. Given GM's pleas for
federal financing, market participants were already well aware of the
automaker's problems.
Retailers had an ugly session after a battery of companies reported
ugly same-store sales for February. Gap
(GPS 10.21, -0.45), Abercrombie
& Fitch (ANF 18.24, -2.69), American Eagle (AEO 9.13,
-0.81), and Nordstrom
(JWN 12.23, -1.36) all reported double-digit declines.
However, companies catering to more cost-conscious consumers
reported increased same-store sales. Aeropostale (ARO 23.09, -0.02), Wal-Mart (WMT 49.75, +1.26), and Family Dollar (FDO 30.66, +3.39) were
the stand-outs. Family Dollar complemented its report with upbeat guidance,
while Wal-Mart increased its dividend.
In the past Wal-Mart has been considered a bellwether for
retailers. However, the market recognizes that the discount retailer's strength
is a reflection of consumer weakness, which is rooted in depreciating home
values, falling stock prices, and rising job losses.
Weekly jobless claims for the week ended Feb. 28 totaled 639,000.
Continuing claims came in near 5.11 million. Though claims weren't as high as
expected, job markets remain weak.
With job losses mounting, many homeowners are unable to stay
current on their mortgage payments. In turn, mortgage delinquencies as a
percentage of total loans totaled 7.88% in the fourth quarter. That was up from
the 6.99% delinquency rate in the third quarter.
Fourth quarter nonfarm productivity declined 0.4%, though it was
expected to increase 1.2% after the prior reading showed a 3.2% increase. The
lower reading was a result of lower economic output in the fourth quarter.
Meanwhile, fourth quarter unit labor costs increased 5.7%.
Economists expected a 3.8% increase.
Factory orders for January fell 1.9%, which is a less severe drop
than the 3.5% decline that was widely expected. The drop in factory orders
reflects the retrenchment by businesses in the wake of softer spending.
European markets also traded lower Thursday. Germany's DAX dropped
5.0%, Britain's FTSE fell 3.2%, and
Meanwhile,