Uncertainty could be the rule on Wall Street again today, especially for investors watching for signs of an economic slowdown. General Electric, a bellwether for both the industrial and financial sectors of the economy, is due to report its third-quarter earnings.
Late Thursday, the White House announced that President Bush would address the nation at 7:25 a.m. PDT today in an effort to calm markets.
"He will assure the American people that they should be confident that economic officials are aggressively taking every action to stabilize our financial system," spokeswoman Dana Perino said.
Earlier, administration officials said that if conditions in the credit markets didn't improve, the government might offer to buy stock in banks that needed more capital.
Perino described the proposal as "capital injections that would actually be investing in banks but not taking them over." She said the idea was one of a range of options available to Treasury Secretary Henry M. Paulson.
Any purchases of bank stock or troubled mortgage debt are not expected for a few weeks, officials said, adding that the Treasury Department was "moving quickly to use new tools to improve liquidity, which is the root cause of this problem."
In recent sessions, the stock market has rallied early in the day only to drop off a cliff in the last hour or so of trading. Analysts said that pattern could reflect selling of stocks by mutual funds, hedge funds and brokerage firms at the behest of clients. Those clients could be dumping shares out of fear of further losses or because of a need for cash triggered by the credit crunch or the shrinking value of their portfolios.
"Right now, you can take economic fundamentals . . . and throw them out the window," said market strategist Joe Battipaglia at Stifel Nicolaus & Co. "This is mass liquidation at the point of a gun."
TrimTabs said investors pulled a record $52.1 billion from U.S. stock and bond mutual funds in the last week. That followed a $72.3-billion outflow in September, the most in a single month. Much of the money has gone into bank accounts, Gann of TrimTabs said.
"People are going into the safest things they can find," he said. "They're avoiding risk in all forms."
Thursday's sell-off certainly had the earmarks of a stampede from a burning theater. All of the Dow's 30 stocks were down, as were the shares of all but 12 of the 500 companies in the benchmark Standard & Poor's 500 index, which sank 7.6%. Falling stocks outnumbered rising ones by 12 to 1 on the New York Stock Exchange.
