Wednesday, the US stock market continued its declining trend and fell sharply to new November lows on the back of downside earnings guidance by a major retailer for fiscal year 2009 followed by the words from the Treasury Secretary Henry Paulson shifted the focus of the government''s bailout plan from troubled mortgage assets to non-banks and consumer finance.

Treasury Secretary Paulson announced that the Treasury is dropping its original plan to buy troubled mortgage assets, as it no longer believes the plan is the most effective way to use the $700 billion financial relief package. He also said that the treasury will focus on three priorities, first it will work to reinforce the stability of the financial system, which may include another round of direct equity investments that will include banks and nonbanking companies.
Second, Paulson said the government will look at ways to support credit from outside the banking system, including the development of a liquidity facility for AAA asset-backed securities. The asset-backed securities give consumers greater access to credit, such as auto loans and credit cards.
Finally, the Treasury is looking at ways to mitigate mortgage foreclosures.

Among the corporate news front, the retailer Best Buy said the changes in the consumer behaviour has created a difficult climate it has ever seen. As a result, the company slashed its fiscal year 2009 (ends in February) earnings per share guidance $2.30 and $2.90 from its previous forecast of $3.25 to $3.40.

The Dow Jones Industrial Average (DJIA) dropped by 411.30 points to close at 8,282.66. The NASDAQ Composite (RIXF) index decreased by 81.69 points to close at 1,499.21 and the S&P 500 (SPX) slipped by 46.64 points to close at 852.31.

Among the Dow’s 30 components, 29 of its components ended in red mainly led by the stocks like American Express, Citigroup and Bank of America down by 10.49%, 10.74% and 9.04% respectively. However, Shares of GM gained 5.5% after plunging to a 65-year low during Tuesday''s session on reports that the Rep. Barney Frank wants the Treasury to use some of its $700 billion to provide $25 billion in loans to GM, Ford and Chrysler.

A total of around 0.9 bn shares were traded on the NASDAQ, with declining stocks outpaced the advancing stocks by 6 to 1. On the New York Stock Exchange around 1.5 bn shares traded for the day, with declining stocks outpaced the advancing stocks by 10 to 1.

Crude oil futures for the month of December delivery fell $3.17 at $56.16 per barrel on New York Mercantile Exchange. The crude prices fell to a low to $55.83 a barrel in electronic trading. The crude price slipped to the lowest level in almost 22 months, as concerns about the global economy has led to the belief of reduced demand.

The gold for the month of December delivery fell $14.50 at $718.30 an ounce on the New York Mercantile Exchange. The gold prices touched a low to $711.50 an ounce earlier in the electronic trading.

Tags: us stock market, dow jones, nasdaq