Japan's shares plunged, driving the Nikkei 225 Stock Average to its
third-largest decline. The accelerating credit crisis prompted a
sell-off that erased more than $250 billion in equity value.
Toyota
Motor Corp., the world's second-largest carmaker, fell the most in 21
years after Nikko Citigroup Ltd. cut its rating. Mizuho Financial Group
Inc. slid 7.7 percent as bankruptcies surged to the highest since May
2003. Elpida Memory Inc., the nation's largest computer memory maker,
dropped to a record low as the yen strengthened to 100 against the
dollar.
The Nikkei 225 Stock Average sank 952.58, or 9.4 percent,
to 9,203.32 at the close of trading in Tokyo, the steepest fall since a
15 percent drop in October 1987. The broader Topix index declined
78.60, or 8 percent, to 899.01, also the biggest loss in 21 years.
Losses accelerated through the day as markets across Asia plummeted and
Indonesia's exchange suspended trading.
The $250 billion in value erased from the main board of the Tokyo exchange was the most for a single day since at least 1989.
Toyota
plunged 12 percent to 3,280 yen, the biggest slide since October 1987.
Nikko Citigroup's Noriyuki Matsushima cut his rating to ``sell'' from
``buy,'' saying operating profit is likely to be 1.1 trillion yen
($10.9 billion) for the year ending in March, 31 percent below the
company's estimate.
The Nikkei newspaper said Toyota's operating
profit may drop 40 percent this year to 1.3 trillion due to slowing
demand for cars.
Isuzu Motors Ltd., Japan's largest maker of
light-duty trucks, slid 14 percent to 192 yen, the steepest fall since
August 2004. Hino Motors Ltd., which makes trucks for Toyota, dropped
14 percent to 295 yen after Nikko Citigroup also lowered the shares to
``hold'' from ``buy.''
Mizuho, Japan's second-largest listed bank,
dropped 7.7 percent to 361,000 yen. Sumitomo Mitsui Financial Group
Inc., the third largest, declined 6.5 percent to 559,000 yen.
Nippon
Steel Corp., the nation's largest maker of the alloy, dropped 12
percent to 281 yen after its chairman said in an interview with the
Nikkei that global steel demand will slow. JFE Holdings Inc., the No.
2, fell 14 percent to 2,330 yen.
European stocks fell,
sending the Dow Jones Stoxx 600 Index to its worst three-day retreat
since October 1987, on concern a coordinated interest-rate cut by six
central banks won't prevent a global recession.
Royal Ahold
NV, the Dutch owner of the U.S. Stop & Shop chain, dropped 6.6
percent as American retailers including J.C. Penney Co. forecast profit
below analysts' estimates. BHP Billiton Ltd., the world's biggest
mining company, sank 11 percent and BP Plc lost 6.8 percent as metals
and oil slumped. Barclays Plc declined 2.4 percent even after British
banks got a 50 billion-pound ($87 billion) government lifeline and
emergency loans from the central bank.
National indexes fell more
than 4 percent in all 18 western European markets except Iceland and
Portugal. Germany's DAX slipped 5.9 percent. The U.K.'s FTSE 100
declined 5.2 percent, while France's CAC 40 sank 6.3 percent.
Ahold slumped 6.6 percent to 7.48 euros. Tesco Plc, the U.K.'s biggest supermarket company, lost 3.1 percent to 381.1 pence.
J.C.
Penney, Kohl's Corp. and Nordstrom Inc. forecast third-quarter profit
that may trail analysts' estimates after September sales fell because
of consumer concerns that the Wall Street meltdown will cost them their
jobs and savings.
BHP Billiton dropped 11 percent to 972.5 pence.
Anglo American Plc, the world's fourth-largest diversified mining
company, declined 8.7 percent to 1,420 pence.
Copper, the metal
used in wires and pipes, declined 6 percent to $5,295 a metric ton on
the London Metal Exchange. Aluminum, nickel, tin, zinc and platinum
also retreated.
BP, Europe's second-biggest oil company, slipped
6.8 percent to 417 pence. Royal Dutch Shell Plc, the region's largest,
declined 5.8 percent to 18.80 euros.
Barclays, the U.K.'s second-biggest bank by market value, retreated 2.4 percent to 278.25 pence.
The
Fed's decision today brought its benchmark rate to 1.5 percent. The
ECB's main rate is now 3.75 percent; Canada's fell to 2.5 percent; the
U.K.'s rate dropped to 4.5 percent; and Sweden's rate declined to 4.25
percent. China cut interest rates for the second time in three weeks,
reducing the main rate to 6.93 percent.
Stocks traded in an
extremely volatile manner on Wednesday as investors digested a
coordinated global interest rate cut, economic concerns and turmoil in
the financial markets.
The S&P 500 settled with a loss of
1.1% after a surge in selling interest in the final half-hour of trade
sank stocks from a 2% gain. The S&P 500 traded as high as 2.5% and
down as much as 2.5%. Eight of the ten economic sectors posted a loss
in heavy trading volume.
The Federal Reserve, European Central Bank,
Bank of England, Swiss National Bank, Bank of Canada, and Sveriges
Riksbank (Sweden) made an emergency intermeeting coordinated 50 basis
point rate cut. Increased economic risks and moderating inflation
pressures warranted the move in an effort to improve liquidity and
reduce strains in the financial market, the Fed said. The fed funds
rate is now at 1.50%, and the discount rate is at 1.75%.
The move to
cut interest rates came as global equities tumbled due to tight credit
markets and economic worries. Japan's Nikkei plummeted 9.4% and Hong
Kong's Hang Seng dropped 8.2%. Europe fell 6.0% as its financial
institutions remain troubled -- Britain announced a plan to bailout its
banking system, which included a pledge for $87 billion in direct
support for eight major banks, according to reports.
In corporate
news, Bank of America (BAC 21.97, -1.80) fell 7.6% after its $10
billion common stock offering was priced at a 7.5% discount to
yesterday's closing level and a 31.7% discount to BofA's closing level
on Monday. BofA plunged more than 25% on Tuesday after announcing
disappointing third quarter earnings, giving a dour outlook, cutting
its dividend by 50% and announcing the $10 billion common stock
offering.
The financial sector (-3.0%) ended the session as a
laggard after giving up a 3.9% gain in late-session selling pressure as
investors were aware that the SEC short-selling ban is scheduled to
expire at midnight tonight.
Dow component Alcoa (AA 14.60, -2.11)
marked the start of the third quarter earnings season on a negative
note after the aluminum maker's results fell well short of
expectations. Third quarter earnings per share dropped 40%
year-over-year due to falling aluminum prices, softening demand and
higher costs.
Despite the weakness in Alcoa, the material sector
outperformed with a gain of 2.6%. Agriculture chemical company Monsanto
(MON 81.63, +7.45) pleased investors with its quarterly earnings report.
In
commodity trading, oil prices saw large swings, moving largely in
tandem with stocks, as traders speculated how the global economic
turmoil will impact demand. The government's weekly energy inventory
data showed larger-than-expected increases in crude and gasoline
stockpiles. Oil prices fell 1.6% to $88.64 per barrel.
Despite the
economic turmoil and uncertainty, Treasuries came under selling
pressure after the government sold additional debt to meet high
investor demand, according to reports. The 10-year note dropped 46
ticks to send its yield up to 3.67%.