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05-07-2005, 01:07 AM
NEW YORK (Reuters) - U.S. stocks fell on Thursday after Standard & Poor's cut the debt ratings of General Motors Corp. (GM.N: Quote, Profile, Research) and Ford Motor Co. (F.N: Quote, Profile, Research) to junk status, dealing a blow to major automakers and companies that supply them.
General Motors was down 5.7 percent to $30.92 while Ford fell 5 percent to $9.66.
The downgrade reversed part of Wednesday's market rally. U.S. stocks rose sharply on Wednesday after a buying spree was sparked by billionaire Kirk Kerkorian's offer to more than double his stake in GM.
"Notwithstanding the Kerokian news yesterday, it means that there are more problems ahead for these key sectors in the U.S. economy," said Jon Brorson, managing director of growth equities, Neuberger Berman, Chicago.
"Again, I look at these rating agencies as being almost a signal of the bottom behind the events. It seems like they're trying to get us ahead of the news a little bit."
The Dow Jones industrial average was down 56.76 points, or 0.55 percent, at 10,327.88. The Standard & Poor's 500 Index was down 5.74 points, or 0.49 percent, at 1,169.91. The Nasdaq Composite Index was down 6.51 points, or 0.33 percent, at 1,955.72.
The Dow, which was little changed before the downgrades were announced in early afternoon, slid close to 1 percent. It later retraced some of the slide.
"The market is starved for the latest data point," said Tim Swanson, chief investment officer for National City Corporation's Wealth Management Group in Cleveland. "I think people are just fixated on the headlines and this is a knee jerk reaction."
Auto parts makers fell after the GM and Ford downgrades. Visteon Corp. (VC.N: Quote, Profile, Research) fell 8 percent to $3.62 while Delphi Corp. (DPH.N: Quote, Profile, Research) was down 9 percent to $3.49.
Elsewhere, IBM (IBM.N: Quote, Profile, Research) fell about 1.5 percent to $75.90, dragging on the blue-chip Dow and the broader Standard & Poor's 500, a day after it said it would cut up to 13,000 jobs in a move that will lead to a second-quarter pretax charge of up to $1.7 billion.
But Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) , the world's largest retailer, was up 8 cents at $48.53 after it said April sales at U.S. stores open at least a year met its forecast. (ID:nN05726596: Quote, Profile, Research) .
Wall Street was also looking ahead to a widely-watched report on job creation, which is expected to show payrolls rose 170,000 in April, due to be released Friday.
General Motors was down 5.7 percent to $30.92 while Ford fell 5 percent to $9.66.
The downgrade reversed part of Wednesday's market rally. U.S. stocks rose sharply on Wednesday after a buying spree was sparked by billionaire Kirk Kerkorian's offer to more than double his stake in GM.
"Notwithstanding the Kerokian news yesterday, it means that there are more problems ahead for these key sectors in the U.S. economy," said Jon Brorson, managing director of growth equities, Neuberger Berman, Chicago.
"Again, I look at these rating agencies as being almost a signal of the bottom behind the events. It seems like they're trying to get us ahead of the news a little bit."
The Dow Jones industrial average was down 56.76 points, or 0.55 percent, at 10,327.88. The Standard & Poor's 500 Index was down 5.74 points, or 0.49 percent, at 1,169.91. The Nasdaq Composite Index was down 6.51 points, or 0.33 percent, at 1,955.72.
The Dow, which was little changed before the downgrades were announced in early afternoon, slid close to 1 percent. It later retraced some of the slide.
"The market is starved for the latest data point," said Tim Swanson, chief investment officer for National City Corporation's Wealth Management Group in Cleveland. "I think people are just fixated on the headlines and this is a knee jerk reaction."
Auto parts makers fell after the GM and Ford downgrades. Visteon Corp. (VC.N: Quote, Profile, Research) fell 8 percent to $3.62 while Delphi Corp. (DPH.N: Quote, Profile, Research) was down 9 percent to $3.49.
Elsewhere, IBM (IBM.N: Quote, Profile, Research) fell about 1.5 percent to $75.90, dragging on the blue-chip Dow and the broader Standard & Poor's 500, a day after it said it would cut up to 13,000 jobs in a move that will lead to a second-quarter pretax charge of up to $1.7 billion.
But Wal-Mart Stores Inc. (WMT.N: Quote, Profile, Research) , the world's largest retailer, was up 8 cents at $48.53 after it said April sales at U.S. stores open at least a year met its forecast. (ID:nN05726596: Quote, Profile, Research) .
Wall Street was also looking ahead to a widely-watched report on job creation, which is expected to show payrolls rose 170,000 in April, due to be released Friday.