At noon: Goodbye, gains

Monday, November 10, 2008

U.S. stocks surrendered all of their gains as trading approached the midway point on Monday, with investors growing more concerned about the impact of a slowing economy.

At noon, the Dow Jones industrial average was down 13 points, to 8931. At the start of trading, the index had been up more than 200 points on an upbeat reaction to China's efforts to stimulate its economy with $586-billion (U.S.) worth of infrastructure spending and tax deductions. The broader S[amp]amp;P 500 fell 3 points, to 928.

Financials fell 3 per cent, utilities fell 2.3 per cent and consumer discretionary stocks fell 1.9 per cent.

Investors looked inward as the morning progressed and didn't like what they saw. Deutsche Bank downgraded General Motors Corp. to a “sell” recommendation along with a $0 price target – suggesting the stock was dead. Plus, analysts at Barclays Capital said that Goldman Sachs Group Inc. would report its first loss as a publicly traded company when it releases its fourth-quarter results next month. Barclays predicted Goldman Sachs would lose $2.50 a share.

Meanwhile, electronics retailer Circuit City Stores Inc. filed for bankruptcy and the U.S. government unveiled a new plan to help American International Group Inc., this one raising the bailout to $150-billion from $123-billion previously.

In Canada, the S[amp]amp;P/TSX composite index fared better – though also down from earlier highs – thanks to rising commodity prices. The index was up 124 points, or 1.3 per cent, to 9720.

Materials stocks were up 3 per cent, energy stocks were up 2.3 per cent, industrials were up 1.3 per cent and financials were up 0.8 per cent.

[amp]nbsp;

© Copyright The Globe and Mail