Dow drops 280 in early trading on earnings woes

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(Agencies)
Updated: 2008-10-22 22:37

NEW YORK -- Wall Street tumbled again Wednesday as investors again shifted their focus away from improving credit markets and fixated on worrisome corporate earnings that are raising fears of a deep and painful recession. The major indexes fell more than 1 percent, including the Dow Jones industrial average, which fell 280 points.

Traders work on the floor of the New York Stock Exchange October 22, 2008. US stocks tumbled at the open on Wednesday as mounting concern that the global economy is hurtling toward recession, diminishing investors' appetite for risk and sending world markets lower. [Agencies]

In the first half-hour of trading, the Dow fell 279.25, or 3.1 percent, to 8,754.41. On Tuesday, the Dow retreated 231 points after forecasts from DuPont Co., Sun Microsystems Inc. and Texas Instruments Inc. raised fears that companies' outlooks for the fourth quarter and beyond could signal a severe economic downturn.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 29.37, or 3.08 percent, to 925.68, and the Nasdaq composite index fell 30.01, or 1.77 percent, to 1,666.67.

While reduced strains in world credit markets have eased some investors' nervousness about the economy, market anxiety remains high as hundreds of companies this week release third-quarter earnings and in some cases fourth-quarter forecasts that offer a glimpse of the rough conditions that may lay ahead.

On Wednesday, commercial and personal property insurer Travelers Cos. said hurricane-related losses pushed third-quarter profit down 82 percent and forced it to lower its full-year forecast.

In other earnings, Wachovia Corp., which is being bought by Wells Fargo & Co., said it swung to a huge loss in the third quarter while the drug maker Merck & Co. said its quarterly profit fell 28 percent and that it would cut more than 10 percent of its work force.

Meanwhile, credit markets showed more signs of improvement after virtually freezing up last week. Bank-to-bank lending rates fell sharply overnight, indicating that credit is becoming easier to obtain. The London Interbank Offered Rate, or Libor, on three-month loans in dollars fell to 3.54 percent from 3.83 percent, dropping for an eighth straight day.