Wall Street Losses Continue As Gm and Apple Disappoint

Wall Street yesterday suffered a second successive day of heavy losses, falling to five- month lows as the slowing economy combined with disappointment in important companies, including General Motors and Apple.

IBM failed to meet expectations in its first-quarter figures after the close of the session, potentially creating further downward pressure today.

The Dow Jones, which fell 104 points on Wednesday, lost another 125 yesterday to close at 10278.75. The level was its lowest since November 3 and the biggest two-day drop in eight months.

GM, the world's largest auto-maker tumbled 5.9% during the session to $26.66, making it the worst performing stock. GM shares are at a 12-year low.

Wall Street appears to be increasingly concerned that the economy has begun to falter, worries underlined by weaker than expected March retail sales figures published yesterday. At the same time, the Federal Reserve has warned that it might need to accelerate interest rate increases while oil prices were rising once again.

GM fell after the United Auto Workers union indicated that it would not be prepared to rewrite contracts to deal with the soaring costs of healthcare in the US. There were even rumours that GM faced possible bankruptcy.

Himanshu Patel, an analyst at Morgan Stanley, said that comments from GM chief executive Rick Wagoner that GM is being "crushed" by healthcare costs "have been twisted into a bankruptcy possibility".

But, he added, GM has a "vested interest in painting a bleak financial picture" to the union. "The balance sheet facts argue that GM faces min imal near-term bankruptcy risk in our view."

Apple, listed on the Nasdaq market, has become a victim of its own success. Despite posting quarterly profits on Wednesday six times higher than the same period in the previous year, the company failed to reach some of the ambitious revenue targets set by analysts. Wall Street also began expressing concerns that Apple might not be able to replicate the success of the iPod with new products. Shares fell 9.2% to $37.26.

The Nasdaq fell 1.4% to 1946.71, a level last flirted with on October 26. IBM shares fell 4% in after hours trading after the company reported revenue growth of just 1% in the first quarter after currency effects were stripped out. Chief executive Sam Palmisano said the company had found it more difficult than anticipated closing some transactions.