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Stocks Plummet to Fresh 2005 Lows Amid Soaring Oil Prices and Weak Profit Outlook

Strategic Insights

— 1 min read

Oil prices hit a six-week high, rising for a third consecutive day, as the US trade deficit widened in November. This, combined with a weaker profit outlook from General Motors and lower-than-expected earnings estimates from Verizon, sent stocks tumbling to fresh 2005 lows. The Dow Jones industrial average fell 1.05 percent, while the S&P 500-stock index and the Nasdaq composite index also suffered significant losses.

Key Takeaways:

  • General Motors, the world's largest car company, fell 2.8 percent after it said it expected earnings this year to fall due to weaker profit from its financial services unit.
  • The Dow Jones industrial average dropped 111.95 points, or 1.05 percent, to 10,505.83, marking its lowest level in five weeks.
  • The Standard & Poor's 500-stock index fell 10.25 points, or 0.86 percent, to 1,177.45, also reaching a new low for the year.
  • The Nasdaq composite index was down 21.97 points, or 1.05 percent, at 2,070.56, its lowest level in two months.
  • Verizon Communications dropped nearly 3 percent after several analysts lowered earnings estimates.
  • Apple Computer's shares jumped 6.6 percent, or $4.34, to $69.80, but its gain was not enough to fuel the Nasdaq.
  • Sun Microsystems fell nearly 7 percent, to $4.30, after reporting a small quarterly net profit.
  • The 10-year Treasury note rose 18/32, to a price of 100 22/32, with its yield falling to 4.16 percent.

Statistics:

  • The Dow Jones industrial average fell 111.95 points, resulting in a 1.05 percent decline.
  • The Standard & Poor's 500-stock index fell 10.25 points, representing a 0.86 percent decrease.
  • The Nasdaq composite index declined by 21.97 points, marking a 1.05 percent drop.
  • Oil prices rose for the third consecutive day, with crude for February delivery on the New York Mercantile Exchange hitting $48.04 a barrel, a six-week high.
  • General Motors expected earnings this year to fall, in part due to weaker profit from its financial services unit.
  • Verizon's shares dropped nearly 3 percent after analysts lowered earnings estimates.
  • Apple Computer's shares jumped 6.6 percent, with the stock rising to $69.80, a day after beating Wall Street estimates.

Sources:

  • Associated Press
  • Bloomberg Financial Markets
  • F.H.L.M.C. (Federal Home Loan Mortgage Corp.)

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