The stock market was mostly flat this morning, as investors weighed the Federal Reserve Board's latest half-point interest rate cut against the U.S. Commerce Department's announcement that the nation's gross domestic product contracted 0.3 percent in the third quarter, signaling a recession.
Consumer spending declined at its fastest rate in 28 years, the Commerce Department said.
Facing a decline in demand, American Express Co. said today it will cut 10 percent of its staff, or about 7,000 people. The credit card company also said it will suspend management salary increases in 2009 and institute a hiring freeze on open positions.
American Express said it will scale back investment spending on technology, marketing and business development, and streamline costs associated with some of its rewards programs.
The initiatives will result in American Express incurring a pre-tax restructuring charge of up to $440 million.
"We've been engaged for the past few months in an intensive, companywide review of priorities and staffing levels," said Kenneth Chenault, chairman and chief executive officer of American Express. "The reengineering program we announced today will help us to manage through one of the most challenging economic environments we've seen in many decades. It will also put us in position to ramp-up investment spending as economic conditions improve so that we can take advantage of the substantial opportunities that will be available to us over the medium to long term."
Meanwhile, Exxon Mobil Corp.'s third-quarter net income rose 58 percent to a new record of nearly $15 billion.
Locally, the BizTimes Stock Index recovered .90 points to close at 90.40 Wednesday. The largest local advancers this morning were Weyco Group Inc. (up $1.86 to $27.11), Wisconsin Energy Corp. (up $1.63 to $43.68) and Kohl's Corp. (up $1.75 to $32.80). The largest local decliners this morning were Marshall & Ilsley Corp. (down 73 cents to $17.93), Sensient Technologies Inc. (down 47 cents to $24.11) and Modine Manufacturing Inc. (down 39 cents to $7.54).
Stocks flatten as American Express announces severe cutbacks
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