US Stocks end lower again

US shares ended lower for the second day in a row on Tuesday, as recession fears offset a new government plan to help troubled homeowners. Also, quarterly results and outlook from luxury home builder Toll Brothers and coffee retailer Starbucks heightened concerns over rapidly contracting consumer spending.

Deteriorating outlook for the American industry and crude oil's drop below US$59 a barrel signaled that the worldwide economic slump will last longer than thought.

GM shares tumbled to the lowest price since 1943 as the automaker crept closer to bankruptcy, while Tyco International, the world's largest maker of security systems, sank 14% on a profit forecast that trailed analysts' estimates.

Hartford Financial Services Group slid 23% after Goldman Sachs said that investment losses may force insurers to raise more capital and threaten credit ratings. All 40 energy shares in the S&P 500 Index decreased as crude declined to a 19-month low.

The S&P 500 index fell 20.26 points, or 2.2%, to 898.95. The Dow Jones Industrial Average dropped 176.58 points, or 2%, to 8,693.96 as 29 of its 30 companies declined. The Nasdaq Composite Index slid 2.2% to 1,580.9.

Market breadth was negative. Five stocks declined for each that rose on the New York Stock Exchange.

US stocks slumped through the early afternoon on recession fears, then recovered most of those losses after the government's mortgage modification plan was unveiled. But the recovery attempt fizzled out by the close.

Corporate news dominated on Tuesday, as government offices and Treasury markets were closed for Veterans Day.

In the afternoon, the Bush administration released its plan to help borrowers. The current plan focuses on Fannie Mae and Freddie Mac - which own or back a combined US$5 trillion in mortgages. However, the plan does not provide any direct financial help from the US government.

American Express shares fell 6.6% despite the Federal Reserve giving the approval for the company and its American Express Travel unit to become bank holding companies.

GM and Ford continued to slide on worries that the companies won't be able to stay afloat without government intervention. GM plunged to a 65-year low after it said it will idle an additional 1,900 jobs on top of those already announced. On Friday, GM posted a steep loss and said it is running out of cash.

Citigroup said it will modify US$20bn in home loans in an effort to keep 130,000 challenged borrowers from defaulting. Citigroup joins Bank of America and JPMorgan in announcing loan modification programs.

Late on Monday, Starbucks reported weaker earnings and higher revenue, both of which missed estimates. Shares declined modestly on Tuesday.

Luxury homebuilder Toll Brothers warned that fiscal fourth-quarter homebuilding revenue fell sharply from a year ago. The company's CEO said that signs of stabilization in the sector that were present a few months ago have reversed amid the financial crisis.

General Growth Properties, the No. 2 mall operator, plunged 64% in unusually active NYSE trade after the company warned it may file for bankruptcy because of near-term debt issues. After the close, S&P said GGP will be removed from the index after the close of trade on Wednesday and replaced by biotech Cephalon.

Altria, the parent of Philip Morris USA, said it has started to cut jobs because of the economic turmoil.

The dollar gained against the euro and fell versus the yen. COMEX gold for December delivery fell US$1.40 to settle at US$732.80 an ounce.

US light crude oil for December delivery fell US$3.08 to settle at a 19-month low of US$59.33 a barrel on the New York Mercantile Exchange.

Gasoline prices dipped another 2 cents to a national average of US$2.22 a gallon. The decline marks the 55th consecutive day that prices have decreased. During that same time period, prices dropped by US$1.63 a gallon, or 42.4%.

The credit market continued to improve, with lending rates continuing to retreat from accelerated levels.

The 3-month Libor fell to 2.18% from 2.24% on Monday, a four-year low. Overnight Libor stood at 0.35%, unchanged from Monday and up modestly from an all-time low of 0.32% last week. Libor is a key inter-bank lending rate.

The Libor-OIS spread, a measure of cash scarcity, fell to 1.69% from 1.80% on Friday. The TED spread, a key indicator of risk, narrowed to 1.96% from 2.03% on Monday.