Midday Market Update: Stocks Lower on Weak Outlook For Earnings, Economy

By Jennifer Yousfi
Managing Editor

U.S. markets headed lower today (Wednesday) on profit and recessionary worries.

At midday in New York, the blue-chip Dow Jones Industrial Average Index was down 48.44 points (-0.39%), to trade at 12,528.00. The tech-laden Nasdaq Composite Index declined 18.17 points (-0.77%), to reach 2,330.59. And the broader Standard & Poor's 500 Index shed 7.56 points (-0.55%), to hit 1,357.98.

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The basic materials sector (up 0.56%) and the energy sector (up 0.85%) posted the biggest gains, while the consumer cyclical sector (down 0.83%) and the transportation sector (down 1.94%) posted the largest declines.

Citigroup Inc. (C) shares gained on a report in The Wall Street Journal that the bank planned to sell $12 billion in debt for 90 cents on the dollar. Fellow financial firms Goldman Sachs Group Inc. (GS), Lehman Brothers Holdings Inc. (LEH) and Morgan Stanley (MS) saw share-price declines after announcing higher levels of "harder-to-value" assets - the so-called "Level 3" assets that have been at the center of many major subprime-related losses in the U.S. finance sector.

Shares of shipping giant United Parcel Service Inc. (UPS) dropped 3% after the firm lowered its outlook for the coming year.

UPS is a "pretty good thermometer of the temperature of the economy,'' Gavin Graham, chief investment officer at Guardian Group of Funds Ltd. in Toronto, which manages about $5.4 billion, said in an interview with Bloomberg Radio. "Unfortunately the temperature is dropping."

In overseas markets early today, Japan's Nikkei Index lost 138.54 points to close at 13,111.89. Hong Kong's blue-chip Hang Seng Index had a 327.12-point loss, to close at 23,984.57.

European bourses were down, with the Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posting losses.

At midday, the dollar had lost ground against the euro (down 0.425%), the yen (down 0.059%) and the pound sterling (down 0.319%).

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