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Stocks fall as investors worry about fate of GM

WALL Street retreated yesterday as traders speculated about the future of General Motors Corp. and awaited a flurry of earnings reports and data that could provide insight into the direction of the economy.

Major stock indicators pulled well off their lows in afternoon trading amid light volume. The Dow Jones industrial average fell about 40 points.

The slide came as Boeing Co. and Chevron Corp. said the weak economy was hurting their results. But several big banks bucked the trend as investors bought shares ahead of their quarterly reports in the coming days.

"If you get a couple earnings reports that are better than the worst that people expected, then that might help," said Denis Amato, chief investment officer at Ancora Advisors.

The market was unsettled yesterday by a New York Times report saying the Treasury has directed GM to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file if it cannot complete a plan to exchange debt for equity, according to the report.

In early afternoon trading, the Dow fell 41.02, or 0.5 percent, to 8,042.36.

Broader stock indicators also slid. The Standard & Poor's 500 index fell 0.31, or less than 0.1 percent, to 856.25, and the Nasdaq composite index fell 7.19, or 0.4 percent, to 1,645.35.

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 the weekend. Markets were closed for Good Friday.

The Dow has rallied for five weeks, but last week showed increased volatility as investors prepared for earnings reports.

GM was the biggest decliner among the 30 stocks that make up the Dow as investors worried about what a bankruptcy might mean for the economy. GM fell 33 cents, or 16.2 percent, to US$1.71.

In other market action, the Russell 2000 index of smaller companies fell 6.05, or 1.3 percent, to 462.15.

Declining issues outnumbered advancers by about 4 to 3 on the New York Stock Exchange, where volume came to 773.3 million shares.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 2.86 percent from 2.92 percent late Thursday. The yield on the three-month T-bill was flat at 0.17 percent from late Thursday.


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