US stocks extend slide after factory orders report

NEW YORK: Stocks are falling again after China deflated investors' hope that it would take new steps to stimulate its economy.

More disheartening U.S. data added to the market's gloom Thursday.
Chinese Premier Wen Jiabao said the government's current stimulus plan would help the world's third-largest economy grow by 8 percent this year, but he stopped short of promising new steps.

The hope that China would unveil more government spending to help its economy was a major factor behind the market's bounce Wednesday. The rally followed a five-day pummeling that left the market at its lowest levels since 1997.

The premier "had his Timothy Geithner moment," said independent market analyst Edward Yardeni, referring to the U.S. Treasury Secretary's speech several weeks ago that the market hoped would reveal details about plans for banks' toxic assets. "He let everyone down."

A better-than-expected report on factory orders offered investors little comfort. The Commerce Department said demand for manufactured goods fell by 1.9 percent during the first month of the year. While this was better than the 3.5 percent drop economists had expected, it marked a record sixth straight month of declines.

Another piece of gloomy news: General Motors said in its annual report that auditors raised serious doubt about the automaker's ability to continue operating. GM has already received $13.4 billion in federal loans, and is seeking a total of $30 billion from the government. GM fell 25 cents, or 11.4 percent, to $1.95.

In early morning trading, the Dow Jones industrial average fell 152.61, or 2.22 percent, to 6,723.23.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 14.83, or 2.08 percent, to 698.04, and the Nasdaq composite index fell 23.37, or 1.73 percent, to 1,330.37.

The Russell 2000 index of smaller companies fell 10.52, or 2.83 percent, to 360.78.

On the New York Stock Exchange 2,524 stocks fell, while only 309 advanced. Volume came to 276.6 million shares

Source: ET