Stocks drop on nagging recession woes
Worries about the economy remain in focus.
NEW YORK (CNNMoney.com) -- Stocks tumbled Tuesday morning as recession fears remained front and center, with the automakers and financial services firms under pressure.
The Dow Jones industrial average (INDU) lost 230 points, or 2.7%, 30 minutes into the session. The Standard & Poor's 500 (SPX) index lost 2.7% and the Nasdaq composite (COMP) shed 2.4%.
Stocks declined Monday, as recession fears overshadowed any relief about the U.S. government's restructuring of the bailout for AIG (AIG, Fortune 500) and China's $586 billion economic stimulus plan.
Government offices and Treasury markets are closed for Veterans Day, leaving the focus on corporate news and fluctuations in commodity markets.
Global markets weakened. Hong Kong's Hang Seng index plunged 4.8%, while Tokyo's Nikkei ended down 3%. European stocks fell in midday trading.
AmEx: The Federal Reserve, using emergency power, granted approval for American Express and its Travel Related Services to become bank holding companies after markets closed Monday.
The move will give AmEx (AXP, Fortune 500) greater access to Federal Reserve funding and government rescue programs.
AmEx shares fell 4% Tuesday morning nonetheless.
Retail: Investors are focused on retailers, expected to report fiscal third-quarter results throughout the week.
Late Monday, Starbucks (SBUX, Fortune 500) reported weaker earnings and higher revenue, both of which missed estimates. Shares declined about 3% Tuesday morning.
Macy's (M, Fortune 500), which will report Wednesday, and JC Penney (JCP, Fortune 500), scheduled for Friday, are both expected to post losses, according to analysts surveyed by Thomson Reuters.
Wal-Mart (WMT, Fortune 500), the world's largest retailer in a torpid industry, is expected to report Thursday a 10% gain in earnings per share, according to analyst consensus from Thomson Reuters. On Friday, the Commerce Department is expected to report a 2.1% in overall retail sales for October, not including automobile, according to economist consensus.
Automakers: President-elect Barack Obama discussed the urgent need for help for the auto industry during a meeting Monday with President Bush, according to aides.
"It was a discussion about the broad health of the industry" that was not just limited to just any one of the nation's three largest car makers, Obama spokesman Robert Gibbs said.
Automakers General Motors (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler have been pushing for aid on Capitol Hill.
House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have asked the Bush administration to consider expanding the $700 billion bailout for financial firms to include automakers.
Oil and money: Oil prices tumbled to near an 18-month low, trading at around $60 a barrel. U.S. crude for December delivery lost $2.66 to $59.75 a barrel in electronic trading on the New York Mercantile Exchange.
The dollar slipped versus the yen, but rose against the euro and the British pound.
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