Stocks turn lower on economic worries
EmptyNEW YORK -- Wall Street turned lower Tuesday, giving back its gains as investors' persistent worries that 2008 could bring recession muted their reaction to the European Central Bank's issuance of $500 billion in loans and profit gains at Goldman Sachs and Best Buy.
The ECB's massive 16-day tender supported the idea that the world's central banks are working to bring back demand to the struggling areas of the credit market. The Bank of England also said it will offer additional reserves to lenders Tuesday, after the U.S. Federal Reserve on Monday conducted a $20 billion auction of 28-day credit.
The Dow Jones industrials has dropped 4% over the past week since the Fed's decision last Tuesday to lower interest rates by a quarter point, less than many investors hoped.
"We've had a rough, rough ride since last Tuesday," said Ryan Detrick, strategist at Schaeffer's Investment Research. "But this is one of the biggest injections we've seen. Five hundred billion -- that's definitely trying to fix things."
But few are calling the end of the credit crunch yet -- and alongside U.S. government data showing that new home construction fell once again in November to its lowest rate in 16 years, the central banks' actions failed to galvanize a market that remains anxious that the economy has further to fall.
"It's very disconcerting that we're getting central bank interventions for a problem that many were hoping would be a self-contained one," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co.
Better-than-expected earnings from the investment bank Goldman Sachs Group Inc. and the electronics retailer Best Buy Co. initially propped up stocks, but cautious comments by the two companies' executives dampened Wall Street's enthusiasm
In late-morning trading, the Dow fell 25.20, or 0.19%, to 13,142.00.
Broader stock indicators also turned lower. The Standard & Poor's 500 index fell 3.63, or 0.25%, to 1,442.27, and the Nasdaq composite index fell 6.31, or 0.25%, to 2,568.15.