Jan. 23 -- U.S. stocks dropped for a sixth day, the longest losing streak since April 2002, after forecasts of slowing sales by Apple Inc. and Motorola Inc. added to concern the economy is falling into a recession.
Apple tumbled the most in more than five years on the Nasdaq Stock Market after saying sales growth will fall to 29 percent this quarter from 35 percent in the previous three months. Motorola, the largest U.S. maker of mobile phones, posted its biggest drop since October 2002 on a forecast for an unexpected loss. Freeport-McMoRan Copper & Gold Inc., the world's second-biggest copper miner, declined to the lowest since August after earnings trailed analysts' estimates.
``I would say that we're already in a recession,'' Jack Rivkin, who oversees $126 billion in New York as chief investment officer at Neuberger Berman, said in an interview with Bloomberg Television. ``Odds are earnings are going to be down for 2008.''
The Standard & Poor's 500 Index, which is off to its worst- ever start to a year, slid 11.31, or 0.9 percent, to 1,299.19 at 11:25 a.m. in New York. The Dow Jones Industrial Average declined 58.77, or 0.5 percent, to 11,912.42.
The Nasdaq Composite Index tumbled 40.15, or 1.8 percent, to 2,252.12 and is in a so-called bear market, marked by a more- than 20 percent drop from its almost seven-year high in October.
A slowing U.S. economy is rattling consumers around the world. Growing concern that losses from subprime mortgages will cause the global economy to slow has battered European shares and sent more than 45 of the world's 68 markets with at least $10 billion in value into bear markets.
Rate Cut
The Federal Reserve cut its benchmark interest rate by 0.75 percentage point yesterday, the most in 23 years. The S&P 500 fell to a 16-month low after the Fed's emergency reduction failed to convince investors the U.S. will avoid recession.
Tobias Levkovich, Citigroup Inc.'s chief U.S. equity strategist, reduced his 2008 estimate for the S&P 500 by 7.5 percent because interest-rate cuts may come too late to avert a decline in earnings. The New York-based strategist lowered his year-end forecast for the S&P 500 to 1,550 from 1,675, according to a note sent to clients.
Technology companies and energy producers, which helped lead the market's advance last year, have been among the biggest decliners in 2008. The S&P 500 has lost 13 percent this year and is headed for its worst monthly decline since August 1998, when the benchmark tumbled 15 percent as Russia defaulted on domestic debt.
Apple, Motorola Slump
Apple dropped $20.54, or 13 percent, to $135.10. Chief Executive Officer Steve Jobs spooked investors by failing to meet the most optimistic projections for first-quarter profit and forecasting slower sales growth. IPod sales were little changed in the U.S., signaling that demand for consumer electronics is waning.
UBS AG and Bank of America Corp. lowered their price estimates on the stock.
Motorola lost $2.10, or 17 percent, to $10.22. The company forecast a loss for the first quarter after posting an 84 percent drop in fourth-quarter profit as customers fled to phones made by competitors. Fourth-quarter net income fell to $100 million, or 4 cents a share, while sales declined 18 percent to $9.65 billion.
Freeport-McMoRan declined $7.17, or 8.8 percent, to $74.35 after fourth-quarter profit fell 2.8 percent on increased costs associated with its acquisition of Phelps Dodge Corp.
Exxon, Chevron
Exxon Mobil Corp., the biggest U.S. oil company, slumped $2.86 to $79.59. Chevron, the second-largest, lost $2.98 to $78.27. Crude for March delivery fell $1 to $88.21 a barrel in New York on concern the world's biggest consumer of energy will slip into recession.
ConocoPhillips, the third-largest U.S. oil company, lost $1.59, or 2.2 percent, to $69.59 even after reporting fourth- quarter profit rose 37 percent to $4.37 billion. Crude rose almost 18 percent during the quarter and touched a record $99.62 on Jan. 2.
Financial shares in the S&P 500 climbed for a second day, adding 2.2 percent as a group on expectations that lower interest rates will spur lending and boost profits. The group lost 21 percent in 2007.
JPMorgan Chase & Co., the third-biggest U.S. bank, increased $2.22 to $43.08. Bank of America Corp., the second- largest, added $1.49 to $38.88.
The Fed's rate cut ``is delivering free money to banks,'' said Wayne Wilbanks, who manages about $1.2 billion at Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia. ``If you look at any of these financials, they are blown-out-of-the-water oversold.''
MGIC, SLM Slump
MGIC Investment Corp., the largest U.S. mortgage insurer, was the biggest decliner in the S&P 500, falling $4.88, or 30 percent, to a 15-year low of $11.17. MGIC fell the most since it sold shares to the public in 1991 after reporting a sevenfold surge in fourth-quarter claims tied to overdue mortgages.
SLM Corp., the biggest provider of student loans, fell $2.10, or 11 percent, to $16.92 after reporting a net loss of $1.6 billion, or $3.98 a share. The company also known as Sallie Mae made a losing bet on its own stock while facing higher borrowing costs and cuts in federal subsidies for loans.
Sallie Mae's results include a $1.5 billion loss on contracts in which the company bet that its stock would rise. Instead, the stock fell after the collapse of last year's $25.3 takeover offer by J.C. Flowers & Co. and other investors.
Europe's benchmark index, the Dow Jones Stoxx 600, dropped 2.9 percent after the European Central Bank damped speculation it would follow the Federal Reserve in lowering interest rates.
U.S. companies that rely on Europe for sales declined. General Electric Co. lost 31 cents to $33.74. The company booked 26 percent of its 2006 revenue from European sales, according to Bloomberg data.
Asian shares rebounded from the worst two-day decline in 18 years, with the MSCI Asia-Pacific Index adding 4 percent. Hong Kong's Hang Seng Index rallied 11 percent, its biggest gain in 10 years.
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