Quarterly results putting fear in market

NEW YORK (AP) — Wall Street extended last week’s slide Monday as investors worried that the quarterly results companies begin releasing this week will signal the economy is in worse shape than feared.

The Dow Jones industrial average fell 125.21, or 1.46 percent, to 8,473.97.

Oil prices helped fuel the pessimism, tumbling 8 percent, or $3.24, to settle at $37.59 a barrel on the New York Mercantile Exchange. It was a new low for the year as investors bet economic weakness would curb demand. Wall Street normally welcomes falling oil as a boost for consumers who pay less to put gas in their car, but steep drops can touch off deeper fears about the overall economy.

Wall Street is expecting that fourth-quarter and full-year earnings will be particularly bleak, especially after several companies warned last week that they are being hit hard by the recession.

Financial stocks declined as investors looked to Citigroup Inc. and Morgan Stanley, which could announce a deal as soon as Wednesday to combine their brokerage operations. The potential tie-up underscores the troubles some banks are still having with tattered balance sheets, and a prominent analyst said Citigroup might still need to raise cash.

The intensity of the fear that permeated the market and provoked the heavy selling of September, October and November has lessened, said Bernie McGinn, chief executive of McGinn Investment Management, but investors are still hesitant to flood back into the market.

Monday’s decline came on light volume, indicating an absence of buyers, not a rush of sellers.

Traders said many investors were sitting on the sidelines until they get a better read on companies’ quarterly numbers and, more important, their forecasts for the year.