Stocks Open Lower on Economic Concerns

NEW YORK – Disheartening news from some of the nation's biggest retailers sent stocks falling for a third straight session Wednesday, as investors feared that Americans would be unable to help the economy avoid a protracted slump.

Macy's Inc. said it lost $44 million in the third quarter as sales at the department store retailer fell more than 7 percent. Consumer electronics retailer Best Buy Co., meanwhile, slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.

Investors are worried that a severe pullback in consumer spending — which drives more than two-thirds of the U.S. economy — will prolong a global economic downturn.

Wall Street also anxiously awaited an update from Treasury Secretary Henry Paulson on the government's $700 billion financial rescue package at 10:30 a.m. EST. There are no major economic reports due to be released during the session.

The future of the country's top automakers remained a major concern on the Street. House Speaker Nancy Pelosi wants Congress to support a financial bailout for the troubled U.S. auto industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy.

President-elect Obama, when he met with President Bush at the White House on Monday, urged Bush to support aid for the auto industry, and Democrats in Congress have begun drafting legislation that would give General Motors, Ford and Chrysler access to $25 billion of the rescue funds.

In midmorning trading, the Dow shed 145.68, or 1.68 percent, to 8,548.28.

The broader Standard & Poor's 500 index dropped 16.13, or 1.79 percent, to 882.82, and the Nasdaq composite index stumbled 26.30, or 1.66 percent, to 1,554.60.

The Russell 2000 index of smaller companies fell 7.68, or 1.59 percent, to 474.61.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to a light 191.62 million shares.

Concerns about consumer spending contributed to the market's declines on Monday and Tuesday.

Government bond prices, which did not trade Tuesday because of Veterans Day, moved higher as investors looked for safer investments. The three-month Treasury bill's yield fell to 0.19 percent from 0.22 percent late Monday, and the yield on the benchmark 10-year Treasury note fell to 3.69 percent from 3.76 percent late Monday.

Lower yields indicate stronger demand.

Crude dropped below $59 a barrel Wednesday on the growing realization that global economic growth next year will slow more than originally feared, cutting demand for crude products such as gasoline. Light, sweet crude fell $1.61 to $57.72 a barrel on the New York Mercantile Exchange.

In corporate news, American Express Co. is said to be seeking about $3.5 billion from the government to help boost its balance sheet, according to a report in The Wall Street Journal citing people familiar with the situation. AmEx, the No. 4 U.S. credit card issuer, won approval Monday from the Federal Reserve to become a bank holding company, which gives it the ability to grow a large deposit base and access financing from the Fed.

AmEx shares dropped $1.87, or 8.4 percent, to $20.53.

Prudential Financial Inc. said late Tuesday its 2008 annual dividend will be roughly half of what it paid out to shareholders last year. The insurer said it will pay a dividend of 58 cents per share on Dec. 19 to shareholders of record at the close of business on Nov. 24. Last year, the company paid a dividend of $1.15 per share.

Prudential shares slipped 30 cents to $27.31.

The dollar was mixed against other major currencies, while gold prices dipped.

Overseas, Japan's Nikkei closed down 1.29 percent and Hong Kong Hang Seng fell 0.73 percent. In European trading, London's FTSE 100 fell 0.68 percent, Germany's DAX fell 1.33 percent, and France's CAC-40 dropped 0.86 percent.