Stocks in U.S. Tumble After Service Industries Report Points to Recession

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from Bloomberg:



U.S. Stocks Fall After Service Industries Unexpectedly Shrink

By Michael Patterson

Feb. 5 (Bloomberg) -- U.S. stocks tumbled the most in 11 months after service industries contracted at the fastest pace since 2001, reinforcing concern the economy is in a recession.

Exxon Mobil Corp. and General Electric Co. led declines in New York trading and all 10 industry groups in the S&P 500 retreated after the Institute for Supply Management's index, which reflects almost 90 percent of the economy, fell more than forecast. Citigroup Inc. led 91 of 92 financial shares in the S&P 500 lower after Fitch Ratings said it may downgrade the AAA insurance rating on MBIA Inc., the largest bond guarantor.

The S&P 500 lost 44.18, or 3.2 percent, to 1,336.64. The Dow Jones Industrial Average decreased 370.03, or 2.9 percent, to 12,265.13. The Nasdaq Composite Index slipped 73.28, or 3.1 percent, to 2,309.57. Shares also retreated in Asia and Europe. Almost 11 stocks fell for every one that rose on the New York Stock Exchange.

``As the recession unfolds, then profits will disappoint,'' Stuart Schweitzer, who helps oversee $420 billion as the global markets strategist at JPMorgan Private Bank, said in a Bloomberg Television interview from New York. ``It's already under way.''

Fourth-quarter profits at the 311 companies in the S&P 500 that reported results so far declined 23 percent on average, according to data compiled today by Bloomberg. Still, 64 percent of the companies posted earnings that topped analysts' estimates, compared with 60 percent a year ago.

The S&P 500 has lost 9 percent so far in 2008 for the worst-ever start to a year in the benchmark's eight-decade history, according to S&P analyst Howard Silverblatt. The Dow is down 7.5 percent this year and the Nasdaq has lost 13 percent. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a8utWA4fU8kU&refer=home