US stocks dropped after a report showing 157,000 job losses and falling production at the world's largest steelmaker spurred concern the economy will worsen even as President-elect Barack Obama takes steps to stimulate growth.
Nucor Corp, the largest US-based steel producer, fell 5.9 per cent after ArcelorMittal doubled production cuts amid slowing demand. Transocean Inc, the world's largest offshore oil driller, slid as much as 4.6 per cent on profit that trailed the average analyst estimate. The market’s declines came a day after the biggest presidential Election Day gain in 24 years.
“I don’t know anyone who can say with any sort of real conviction that we're in a bull market next year,” said Pat Becker Junior, chief investment officer at Becker Capital Management Inc in Portland, Oregon, which oversees about $1.7 billion. “Bear markets can last years.”
The Standard & Poor's 500 Index dropped 9.55 points, or 1 per cent, to 996.2 at 10:40 am in New York as a report showing a bigger-than-forecast contraction in service industries also weighed on stocks. The Dow Jones Industrial Average retreated 100.67, or 1.1 per cent, to 9,524.61 and the Nasdaq Composite Index dropped 21.07, or 1.2 per cent, to 1,759.05. More than three stocks fell for every two that rose on the New York Stock Exchange.
The retreat halted an 18 per cent rebound from the S&P 500's five-year low on October 27. The benchmark for US equities has lost 32 per cent this year, the steepest annual plunge since 1937, and Obama will have to contend with an economy pummeled by the fastest contraction in manufacturing in 26 years and the lowest consumer confidence.
The report by ADP Employer Services showed more job cuts than economists had projected and precedes the Labor Department’s November 11 release of employment data for October, expected to show US payrolls shrank for a 10th straight month.
$6 Trillion: The S&P 500 has lost about 36 per cent since it peaked at 1,565.15 on October 9, 2007, as the US economy contracted 0.3 per cent last quarter and credit-related losses and writedowns by global financial firms approached $700 billion. More than $6 trillion was erased from US equities this year by the worst financial crisis since the Great Depression.