U.S. stocks fell today, with Dow Jones industrial average plunging more than 200 points in the last hour of trading, as fears grew over Fridays employment report and the future of General Motors Corp.
The Dow closed down 215.45, or 2.51%, at 8,376.24; the S&P 500 fell 25.52, or 2.93%, ending at 845.22; and the Nasdaq composite closed down 46.82, or 3.14%, at 1,445.56. All numbers are preliminary.
Investors are bracing for gloomy news Friday morning when the Labor Department releases its employment report for November. Forecasters, on average, expect a loss of 350,000 payroll jobs for the month, but the market chatter in late trading was that the number could be as high as 400,000. Analysts also expect the jobless rate to jump to 6.8% from 6.5% in October.
The U.S. economy has already lost more than 1 million jobs this year, pushing the number of workers collecting unemployment benefits over 4 million, the highest level since 1982, according to the Labor Departments latest weekly data.
United Auto Workers President Ronald Gettelfinger told a Senate hearing today, I believe we could lose General Motors by the end of this month,
GM CEO Rick Wagoner told the same panel that the largest U.S. automaker needs a $4 billion cash infusion this month and another $4 billion in January. He cited forces beyond our control, referring to the credit crunch and the rapidly deteriorating economy.
In Europe, central banks reacted to their own recession by slashing interest rates. The European Central Bank delivered an unprecedented 75 basis-point cut in its benchmark rate to 2.5%.
We believe that the ECB is likely to deliver two more cuts of 50 basis points each in this cycle, which would reduce the key rate to 1.5%, the lowest ever ECB rate, Merrill Lynch analyst Guillaume Menuet said in a research note.
The Bank of England also lowered its key overnight rate by one full percentage point to 2%, while Swedens Riksbank also slashed rates by a greater-than-expected 175 basis points to 2%, a 16-year low.