Bad news from companies causes stocks to tumble

On Wednesday the stocks experienced their biggest losses in over a month. The losses came following the warning issued by tech giant Intel regarding the rise of unemployment and expectations of poor business in the near future. 

Some investors were looking for a speedy recovery during the early period of 2009. Their hopes were shattered by this news which sent the major stock indexes down by over 2.5%. The Dow Jones industrials lost 245 points on Wednesday.

This has been Intel’s second warning that it has issued since November. Time Warner from the media industry and aluminum producer Alcoa have also put forward their bleak out looks of the future causing a further decline in the stocks.

Subsequently reports from the National Employment organization said that over 693000 people had lost their jobs in the private sector in December. The number was far greater than what was expected. Investors were but naturally nervous ahead of the issuing of Friday’s employment report.

Wednesday’s declines were however far more orderly than the panicky downfall that took place last fall. The stocks ended up at their lowest level of the season. Retrenchment was bound to occur following the unexpected gains that had been made during recent sessions. 

The president of Capital Financial Advisory Services, Keuth Springer said “Nothing goes straight up or straight down. You do have some people who get skittish and start taking some profits, but I don’t think the up trend has been broken here.”

Wall Street is in a much better condition than it was back in November. Although poor corporate and economic news keeps coming in some investors are still hopeful about making a comeback by the second half of the year or early next year. The latest bad news has however dampened the spirits of the hopeful investors. 

According to Joe Saluzzi, the co-head of equity trading at Themis Trading LCC said that the declining stocks were a reaction to the day’s bad news. He said “One too many punches and the fighter finally went down,” he said.

Intel Corp has openly stated that it expects to experience a dreadful fourth quarter with revenues dropping more than 23% as demand continues to decline from computer makers. Alcoa Inc announced an 18% reduction in output along with a 13% reduction in its global workforce.