| U.S. stocks plunged on Tuesday with all major indexes dropping more than 4 percent as investors were disappointed that the new Financial Stability Plan did not offer more details on buying toxic assets.
Dow Jones Index shed more than 380 points, led by plunging financial shares.
FINANCIAL STABILITY PLAN
U.S. Treasury Secretary Timothy Geithner announced a comprehensive Financial Stability Plan Tuesday morning, unveiling a new bailout package that could top 1.5 trillion U.S. dollars to restore the U.S. ailing financial system.
According to the plan, a new Public-Private Investment Fund will be created to provide government capital and financing to leverage private capital to buy up the "toxic assets" that are dragging down lending.
However, Geithner gave no details on how the new joint entity would price the toxic assets.
Financials suffered a severe sell-off as the uncertainty weighed on the market. Bank of America and Citigroup, which are mostly troubled with bad assets, tumbled 19.3 percent and 15.19 percent respectively.
Investors mainly shrugged off the news that the U.S. Senate approved a 838-billion-dollar economic stimulus package on Tuesday. The bill still needs to be compromised with the Congressional version of 819 billion dollars which was passed earlier this month.
MORE LAY-OFFS
More gloomy corporate news also helped to send the indexes lower.
General Motors Corp. decided to cut 10,000 salaried jobs in 2009 as part of a restructuring plan. The Detroit-based automaker said it will reduce its total number of white-collar workers by 14percent to 63,000. About 3,400, or 12 percent, of GM's 29,500 salaried U.S. jobs will be eliminated.
The world's largest chain retailer Wal-Mart Stores Inc. announced Tuesday that it will cut 700 to 800 jobs at its northwestern Arkansas headquarters as it builds fewer new stores this year and makes other operational changes.
Boeing Co. lowered its reported fourth-quarter and fiscal 2008 earnings per share results late on Monday. The company reported a surprise fourth-quarter loss and announced plans to cut 10,000 jobs last month.
Swiss bank UBS AG said it would cut another 2,000 jobs after posting a larger-than-expected loss in the fourth quarter.
FALLING INVENTORIES
The U.S. Commerce Department reported Tuesday that U.S. wholesale inventories fell 1.4 percent in December, twice as much as forecast, as businesses faced slumping sales. It is the fourth straight monthly decline, the longest such stretch in almost seven years. Meanwhile, sales fell 3.6 percent after a 7.3 percent decline.
The report also showed that wholesalers had enough goods in stock to last 1.27 months at the current sales pace, the highest level since 2002.
The U.S. economy shrank at 3.8 percent in the fourth quarter, the worst since 1982. The most severe economic recession in decades has sent the demand in the United States and worldwide plunging.
In a Commerce Department report released earlier this month, factory inventories fell 1.4 percent in January. Retail stockpiles data is scheduled to be released on the coming Thursday.
The Dow Jones fell 381.99, or 4.62 percent, to 7888.88. Broader indexes also lost ground. The Standard & Poor's 500 index dropped 42.72, or 4.91 percent, to 827.17 and the Nasdaq slid 66.83, or 4.20 percent, to 1524.73.
(Xinhua News Agency February 11, 2009) | 
