Business

U.S. stocks turn lower

NEW YORK: Stocks turned lower on Thursday as Wall Street weighed the prospects for the economy after IBM Corp. affirmed its profit forecast and investors hoped the government might take ownership stakes in banks to help stabilise the financial industry.

But declines in some blue chip names like General Motors Corp. weighed on the markets and hurt the Dow Jones industrial average. Broader market gauges were mixed.

Investors looked to recover from near-panic selling that cascaded through global markets in the past week. Stocks around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help unclog the credit markets and stimulate the global economy.

While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment. Perhaps adding to that, there were some signs on Thursday that corporate earnings might come in better than expected. IBM, one of the 30 stocks that make up the Dow industrials, posted third-quarter results that beat forecasts and affirmed its full-year earnings forecast.

Investors also appeared cheered by a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilise the financial sector. An administration official, who asked not to be identified because no decision has been made, said the $700-billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.

Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of all three of the country’s major banks.

Wall Street also gained some confidence after the government reported applications for unemployment benefits dropped last week from a seven-year high. The Labor Department’s report matched projections, though claims still remain at elevated levels. In midmorning trading, the Dow Jones industrial average fell 69.85, or 0.75 per cent, to 9,188.25. Investors will also be watching to see what effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling — an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 — did more harm than good at a time of historic market volatility. — AP

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