Wall Street slumps as US cuts 100,000 jobs in a week
The Wall Street slumped to its worst January ever as investors eyed abysmal reports on economic growth and several companies across various industries announced more than 100,000 job cuts in a brutal week.business Updated: Jan 31, 2009 09:53 IST
The Wall Street slumped to its worst January ever as investors eyed abysmal reports on economic growth and several companies across various industries announced more than 100,000 job cuts in a brutal week.
The Dow Jones industrial average ended Friday down 148 points, or 1.8 per cent. The Standard & Poor's 500 index lost 19 points, or 2.3 per cent. The Nasdaq composite lost 31 points, or 2 per cent.
Stocks gained in the morning even as the US economy suffered its biggest slowdown in 26 years in the last three months of 2008 with Gross domestic product falling at an annual rate of 3.8 per cent-but not as bad as economists had expected.
Upbeat earnings from Amazon.com and a few other companies also helped Wall Street in the early going.But any early goodwill soon petered out and stocks turned lower.
The bulk of more than 100,000 job cuts this week occurred on Monday, when several major US companies announced sweeping job cuts, pushing the day's total to more than 70,000.
"The picture is still pretty glum out there," CNN cited David Wyss, chief economist for Standard & Poor's, noting that January is often a bad month for the job market, because companies want to include the reductions in their annual tax returns.
Pfizer, the leading drugmaker in terms of annual pharma sales, and Caterpillar, a heavy equipment manufacturer, each said they would cut 20,000 jobs. These are the biggest reported eliminations among US-based companies.
Boeing announced its massive layoffs Wednesday. The Chicago-based airplane manufacturer said 10,000 workers, including 4,500 previously announced reductions, would lose their jobs. The company blamed this on dwindling demand for its aircraft.
Chico's, a retailer of women's clothing said Friday that it was cutting 180 positions. The retail industry has been hard-hit in recent months by a slow-down in consumer spending, partly because so many people have lost their jobs.
Also on Friday, the newspaper publisher AH Belo said it was cutting 500 jobs. Chief Executive Robert Decherd, in a letter to colleagues, blamed the "rapid deterioration in the US economy."
The US economy lost 2.6 million jobs in 2008, according to government reports. This includes 21,137 mass layoffs, a seven-year high. In a mass layoff, 50 or more workers are laid off at a time.