Shares of U.S.-based automakers and suppliers tumbled Wednesday, pulled down by a steep drop in the overall market and worries about what effects the continued troubles in the lending industry could have on the sector.
In midday trading, The Dow Jones industrial average dropped about 300 points, following the government's bailout of insurer American International Group Inc. Recent days have also seen Lehman Brothers Holdings Inc.'s file for bankruptcy protection and Merrill Lynch sell itself to Bank of America.
Also on Wednesday, the Commerce Department reported that new home construction fell by 6.2 percent in August to 895,000 units, the slowest building pace since January 1991.
Demand for housing has traditionally been one of the biggest indicators for automotive sales. Both have dropped dramatically this year as a result of weak consumer confidence, rising unemployment and the ongoing credit industry woes.
Shares of General Motors Corp. posted some of auto sector's the steepest losses, falling 85 cents, or 7.8 percent, to $9.99, after dropping as low as $9.93 earlier in the session.
A Standard & Poor's analyst on Wednesday cut his rating for the Detroit-based automaker to "Sell" from "Hold," saying that the company's near-term outlook has worsened.
Meanwhile, Ford Motor Co. shares dropped 41 cents, or 8.1 percent, to $4.66. Over the past 52 weeks, the Dearborn, Mich.-based company's shares have traded between $4.24 and $9.24.
Among the auto suppliers, American Axle & Manufacturing Holdings Inc. fell 68 cents, or 9.8 percent, to $6.29; Cooper Tire & Rubber Co. dropped $1.03, or 9.9 percent, to $9.43; and Visteon Corp. dropped 37 cents, or 11 percent, to $2.91.
Elsewhere in the sector, Dana Holding Corp. dropped 57 cents, or 8.7 percent, to $5.99; Goodyear Tire & Rubber Co. tumbled $1.29, or 7.2 percent, to $16.61; and ArvinMeritor Inc. fell $1.17, or 7.7 percent, to $14.11. Lear Corp., which hit a year low of $12 earlier, slid $1.27, or 9.5 percent, to $12.10.
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