MARKET SNAPSHOT: U.S. Stocks Down Again As Market Mulls Earnings Ahead

January 9, 2008 1:49pm ET

By Kate Gibson U.S. stocks bounced around Wednesday as a recession forecast from Goldman Sachs and concern about profit reports ahead offset cheer fueled by a raised 2008 forecast from chemicals giant and Dow industrials component DuPont. "It is going to be tough to spot bargains when the tone for the U.S. economy and financial stocks is this negative," said Kevin Giddis, fixed-income trading managing director with Morgan Keegan & Co. Inc. But given the increasingly negative sentiment, a turnaround could be close, Giddis said. "The recent data suggest that the U.S. economy is falling into recession," Goldman Sachs said in a note early Wednesday, in which it also predicted the Federal Reserve would cut interest rates further in response. The Dow Jones Industrial Average (DJI) was off 39.4 points at 12,549.7, with 19 of its 30 components trading lower. General Motors Corp. (GM) fronted the blue chip bleeding, its stock off 5.1%. The Dow's financial stocks also fared poorly, with JPMorgan Chase (JPM) down 1.8% and Citigroup Inc. (C) off 1.7%. The index's biggest gainers included E.I. du Pont de Neumours & Co. (DD), which gained 4.7%. . The S&P 500 (SPX) fell 3.68 points to 1,386.51, while the Nasdaq Composite (RIXF) dropped 13.76 points to 2,426.75. Heavy metal On the New York Mercantile Exchange, gold futures edged higher after surging to a new record high of $894.40 in electronic trading early on. . Crude-oil futures reversed earlier losses after news that U.S. inventories had declined for an eighth week, with crude for February delivery recently up 60 cents at $96.93 a barrel. . Volume on the New York Stock Exchange topped 1 billion shares, and declining stocks ran ahead of those advancing nearly 2 to 1. On the Nasdaq, more than 1.5 billion shares exchanged hands, and decliners beat advancers 2 to 1. As economic worries roiled the equities market, the Bush administration was reportedly considering a rebates and tax breaks to stimulate the economy. . St. Louis Federal Reserve President William Poole offered a more optimistic view of the economy in an address early Wednesday, predicting a recession would be avoided. . Federal Reserve Chairman Ben Bernanke is slated to speak Thursday. Tuesday's washout On Tuesday, fears that Countrywide Financial would file for bankruptcy -- denied by the mortgage lender -- and AT&T's pessimistic outlook triggered a renewed battering for U.S. stocks, with the Dow industrials falling 238 points, the Nasdaq Composite dropping 58 points for its eighth consecutive fall, and the S&P 500 losing nearly 26 points. Countrywide (CFC) stock, which on Tuesday fell 8.8%, declined further Wednesday, and was recently down 15%. "Housing is driving the bus right off the cliff and taking most financial-related companies with it," said Giddis. For the Dow Jones Wilshire 5000, which lost 266.64 points or 1.8%, Tuesday's close capped the worst five-day start of a year in nearly three decades, with the index down 5.78%, or $1.0 trillion, so far this year. The bell tolls After the close of trade, Alcoa (AA) is expected to report a 55% drop in earnings per share, excluding restructuring charges. Shares of Alcoa were off 1.8%. . E-Trade Financial (ETFC) jumped 1.3% after saying it will exit its institutional trading desk and that it sold $3 billion in available-for-securities, taking a loss of less than $5 million. And, shares of MBIA (MBI) fell 13.3% after the bond insurer said it was slashing its quarterly dividend from 34 cents to 13 cents to strengthen its capital. Overseas, European shares touched a 15-month low, as dismal quarterly sales from one British retailer heightened worries about consumer spending trends. . In Asia, several markets rebounded from early lows amid bargain-hunting. . (END) Dow Jones Newswires 01-09-08 1348ET Copyright (c) 2008 Dow Jones & Company, Inc.