Stocks Fall on GM Bankruptcy Worries

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Stocks fell Thursday on concerns over General Motors Corp. (GM) financial health, though earnings growth from oil giants Exxon Mobil Corp. (XOM) and Royal Dutch Shell may limit the decline.

The Dow Jones industrial average was down 13.13 points, while the S&P 500 was off 0.51 point and the Nasdaq down 4.78 points.

On Wednesday, the Dow industrials slipped 33 points at 10,344, the S&P 500 fell 5.2 points at 1,191 and the Nasdaq Composite was off 9.4 points at 2,100.

General Motors said late Wednesday it received subpoenas from the Securities Exchange Commission (search) as part of an agency investigation of the carmaker's pension obligations and business dealings with bankrupt Delphi Corp.

The announcement added to existing jitters in the market about the state of GM's health, and prompted the automaker to deny talk that it's going to file for Chapter 11 (search) bankruptcy protection.

GM, Delphi's former parent, has said it could be on the hook for up to $12 billion in benefits at Delphi because of guarantees it offered when it spun its former parts arm off in 1999. Delphi filed the largest bankruptcy in U.S. automotive history earlier this month.

GM said SEC and federal grand jury subpoenas had also been served on entities linked to its finance arm, General Motors Acceptance Corp. in connection with insurance industry probes into products that may help companies smooth earnings.

In other news, the number of people who lost their jobs because of hurricanes Katrina (search) and Rita has now climbed above the half-million mark with further increases expected in coming weeks from Hurricane Wilma.

The Labor Department reported Thursday that an additional 24,000 people who lost jobs because of the devastating Gulf Coast storms filed applications for unemployment benefits last week, pushing the total over the past eight weeks to 502,000 hurricane-related claims.

In a separate report, the Labor Department (search) said that orders to U.S. factories for big-ticket durable goods fell by 2.1 percent in September, a bigger drop than the 1.5 percent decline economists had been expecting.

Excluding transportation, orders for durable goods, items expected to last at least three years, fell by 1 percent.

The dollar fell against both the euro and the yen in part of GM concerns, and the news also impacted Japan's Nikkei 225, which ended 0.2 percent higher, and European stock markets, which were sharply lower.

Front-month crude oil contracts were trading 79 cents higher at $61.45 a barrel.

Overseas, there were a flood of earnings and sales updates from heavyweights including Royal Dutch Shell, Sony Corp (SNE)., Taiwan Semiconductor, AstraZeneca, France Telecom and Alcatel.

France Telecom and Alcatel cut 2005 outlooks following their third-quarter results, while Taiwan Semi's profit decline wasn't as bad as forecast. Sony held to its fiscal-year forecast while reporting a 47 percent profit decline, while Royal Dutch Shell climbed on a 68 percent profit that was on the high end of forecasts.

Drugmaker AstraZeneca inched higher in London after raising 2005 profit guidance.

One of the few oil companies larger than Shell, Exxon Mobil, is expected to see earnings of $1.38 a share on revenue of $108.2 billion during the third quarter, according to Thomson First Call.

Another Dow component, Verizon Communications (VZ), is seen posting earnings of 64 cents a share on revenue of $18.8 billion.

Software giant Microsoft Corp. (MSFT) is expected to report fiscal first-quarter earnings of 30 cents a share, according to Thomson First Call.

Verizon rival SBC Communications (SBC) added on Thursday that it will adopt AT&T's name upon the closure of its acquisition.

Chinese Internet search company (BIDU) late Wednesday reported slowing earnings growth that was below expectations.