Overseas Markets, Company Warnings Cause Another Wall St. Drop

Stocks plunged on Wednesday, taking the Dow Jones industrials down as much as 395 points before recovering some, as a deepening pessimism about the global economy swept Wall Street for the second time this week.

That new round of investor weakness, and its causes, could spell further bad news for a trucking industry already beset by weaker freight shipments. The stock market’s trends often lead general economic activity, and a new round of stock weakness may block ideas of any near-term U.S. economic rebound.

Investors were particularly unnerved by news from Japan, when the government admitted that the world's second-biggest economy is in a state of deflation. A large decline in the European markets also sparked a fury of selling, the Associated Press reported.

This caused the Dow to dip below 10,000 for the first time since Oct. 20. It finished down 317.34 points, to close at 9,973.46. The Nasdaq composite index and the S&P 500 each lost more than two percent on the day.

The bad news wasn’t only coming from overseas markets. Two truck companies in the process of merging -- M.S. Carriers and Swift Transportation -- both said Wednesday they expect first-quarter earnings to fall well below estimates. Motorola on Tuesday had said it will cut 7,000 more jobs from its cell-phone manufacturing.

In addition, Northwest Airlines, McDonalds and Metlife were other U.S. companies whose profit warnings added to the gloom on the Wall Street.

The Federal Reserve is widely expected to push rates lower again next week, but some analysts do not think these actions are aggressive enough to lift the economy quickly out of its slump.

President Bush on Wednesday called his $1.6 trillion tax cut proposal a remedy for the big plunge in the stock market this week.