Worries about Housing, Consumers Send Stocks Lower

NEW YORK – Homebuilder Toll Brothers Inc. and coffee chain Starbucks Corp. helped send Wall Street sharply lower Tuesday after giving investors more evidence that the housing market and consumer spending are getting weaker. The Dow Jones industrial average fell more than 200 points.

With the government and bond markets closed for Veterans Day, no economic reports are scheduled. But corporate earnings reports were enough to show investors that the economy is still flagging, perhaps more than Wall Street has anticipated.

Toll Brothers said fourth-quarter revenue fell 41 percent from the year-ago period. Chairman and Chief Executive Robert Toll said in a statement the company was "upended by the past month's financial crisis," and that the economic uncertainty made it difficult to predict a profit next year.

Meanwhile, Starbucks reported lower sales across the coffee chain, leading to profits that fell below analysts' expectations. The quarter's results came at the end of a transition year for the coffee retailer, in which former Chief Executive Howard Schultz returned as CEO and chairman.

In early trading, the Dow Jones industrial average shed 230.50, or 2.60 percent, to 8,640.04.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 25.64, or 2.79 percent, to 893.57; and Nasdaq composite index dropped 37.18, or 2.30 percent, to 1579.56.

On Monday, stocks had a relatively calm day, although an early 215-point gain the Dow gave way to a loss of 73 by the close. But analysts are still warning that the market, while it may in the process of forming a bottom after October's huge losses, will still see volatility for some time to come.

The nation's automakers are also a big source of anxiety for the market. General Motors Corp., whose shares plunged on Monday to their lowest point in 60 years, late Monday said it would cut 1,900 factory jobs on top of the 3,600 cuts announced Friday. Some industry analysts predict the automaker will collapse without a government bailout.

GM shares fell 26 cents, or 7.7 percent, to $3.10.

Investors are also waiting to find out if the government will send another round of stimulus checks to consumers, who have been curbing their spending — and not just discretionary spending — in the face of lost jobs, plunging home prices, and tight credit.

Third-quarter earnings declines from Vodafone Group PLC, the world's biggest mobile phone company by sales, and InterContinental Hotels Group PLC, the owner of the Holiday Inn hotel chain, revealed sharp pullbacks in consumer spending.

The financial sector was under scrutiny again Tuesday. Soon after ailing insurer American International Group Inc. got more money from the U.S. government, American Express Co. won approval late Monday from the Federal Reserve to become a commercial bank. That will allow the credit card giant to accept deposits and permanently access government financing that's been used by other banks amid the credit crisis.

Oil prices sank below $60 a barrel Tuesday for the first time in about 18 months as optimism waned that a huge economic stimulus plan in China will avert a prolonged slowdown in the global economy. Light, sweet crude for December delivery fell $2.65 at $59.76 a barrel on the New York Mercantile Exchange.

The dollar was mostly higher against other major currencies, while gold prices fell.

The Russell 2000 index of smaller companies fell 10.31, or 2.09 percent, to 482.79.

Overseas, Japan's Nikkei closed down 3 percent and Hong Kong's Hang Seng fell 4.77 percent. In European trading, Britian's FTSE 100 was down 2.87 percent, Germany's DAX gave up 3.52 percent, and France's CAC-40 fell 3.00 percent.


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