Wall Street fell Monday as investors awaited a flurry of corporate earnings reports and awaited economic readings that could provide insight into the direction of the economy.
Traders were uneasy about a New York Times report saying the Treasury has directed General Motors Corp. to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file for bankruptcy if it cannot complete a plan to exchange debt for equity and receiving concessions from the United Auto Workers, according to the report.
A White House official, speaking on condition of anonymity because no specifics of the GM plan have been announced, told The Associated Press that any speculation about a GM bankruptcy filing was “premature.”
Jamie Cox, managing partner at Harris Financial Group, said the potential economic fallout from a GM bankruptcy filing will likely weigh on the market.
“Think of the economic fallout potential,” Cox said. “It’s inconceivable (GM) gets in to bankruptcy” and gets out quickly, he added.
Investors are also looking to a spate of earnings results throughout the week, including reports from key financial firms such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. Financial companies had been among the hardest hit by the economic downturn and credit crisis, but they have also helped lead a rally over the past five weeks. Goldman’s earnings report is due out Tuesday; JPMorgan’s on Thursday; and Citigroup’s on Friday.
In the first hour of trading, the Dow Jones industrial average fell 81.08, or 1 percent, to 8,002.30.
Broader stock indicators also slid. The Standard & Poor’s 500 index fell 7.87, or 0.9 percent, to 848.69, and the Nasdaq composite index fell 9.64, or 0.6 percent, to 1,642.90.
On Thursday, a surprise announcement by Wells Fargo & Co. that it will report a record quarterly profit for the first quarter helped send the market sharply higher ahead of a long weekend. Markets were closed for Good Friday. The sharp gains made Monday’s selling unsurprising.
Along with earnings reports, investors will receive key economic reports on inflation, housing and manufacturing throughout the week.
Copyright 2009 The Associated Press.