Wall Street walloped anew
Stocks continue the slide, with the Dow and S&P 500 falling to fresh multi-year lows.
Last Updated:
March 5, 2009: 3:31 PM ET
NEW YORK (CNNMoney.com) -- Stocks plunged to fresh 12-year lows Thursday as investors waded through more grim news: GM said its survival is in doubt, bank shares took a beating and Citigroup fell below a buck.
Adding to the global woes: China defied expectations by failing to boost its economic stimulus program.
The Dow Jones industrial average (INDU) fell 230 points, or 3.3%, with 40 minutes left in the session. Earlier, the Dow fell as low as 6,600.65, the lowest point since April 21, 1997.
The Nasdaq composite (COMP) fell 38 points, or 2.8%, holding just above its November 21st session lows. The tech-fueled average has held up better than the other major average so far this year. However, if it closes around 1,315, where it stood around 3:15 p.m. ET, that would put it at an almost 6-year low.
The S&P 500 (SPX) index lost 30 points or 4.3%. Earlier, it had fallen as low as 682.32, the lowest point since Sept. 23, 1996.
Stocks slipped at the open and kept falling from there, with the selling accelerating as the major gauges failed to hang on to key technical levels that traders watch.
"Once we broke through that 700 level on the S&P, which has been intact since 1996, all the people who were watching it left the building," said Joe Clark, market analyst at Financial Enhancement Group.
He said that with the major gauges at these levels,
market pros have even less of a sense of where the so-called bottom is.
Stocks have been sliding on and off since peaking in October of 2007 amid the housing and credit market collapse and the onset of the recession - which technically began in Dec. 2007.
But the declines have picked up the pace year-to-date in response to growing pessimism about the economy. As of Wednesday's close, the Dow is down 23% this year, the worst start in the 113-year history of the Dow.
Since hitting an all-time closing high of 14,164.53 on Oct. 9, 2007, the Dow has fallen 51.5% as of Wednesday's close.
Since hitting an all-time closing high of 1,565.15 on Oct. 9, 2007, the S&P 500 has fallen 54.5% as of Wednesday's close.
Since hitting a bull-market high of 2,859.12 on Oct. 31, 2007, the Nasdaq has stumbled 52.5%. But the Nasdaq has never come near its all-time high of 5,048.62 hit on March 10, 2000, at the height of the Internet boom.
Financials: Among the big losers, financials were hit especially hard. Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Morgan Stanley (MS, Fortune 500) were among the losers. The KBW Bank (BKX) index lost 10%.
Citigroup fell below $1 a share to its lowest level ever.
A variety of insurers slipped including Allstate (ALL, Fortune 500), MetLife (MET, Fortune 500), Chubb (CB, Fortune 500), Pogre (PGR, Fortune 500) and Hartford Financial Services (HIG, Fortune 500).
Failed insurance giant AIG (AIG, Fortune 500) slumped 16% as U.S. regulators discussed the company's $180 billion bailout in a Senate hearing.
"It's the same old story, with the financial sector continuing to hammer the market," said Steven Goldman, market strategist at Weeden & Co.
"Everybody is so bearish right now that you would expect to be in the midst of a counter-trend rally," he said.
"But the implosion in the banking and insurance sectors is just overwhelming."
Stocks managed to snap back from 12-year lows Wednesday on hopes that China would announce that it was increasing the size of its stimulus plan. But the Chinese premier did not announce any boost to the $586 billion plan at a key political meeting in Beijing Thursday. (Full story)
GM: Concerns about the outlook for General Motors also weighed on stocks Thursday. GM said in its annual filing that there is substantial doubt about the automaker's ability to survive.
The company has sustained huge losses over the course of the recession and has already received $13.4 billion in federal loans. GM has said it needs additional federal money to stay afloat. GM (GM, Fortune 500) shares fell 17%.
Wal-Mart Stores: The world's No. 1 retailer reported a bigger-than-expected jump in February sales, thanks in part to lower gas prices. Wal-Mart said that that sales at stores open a year or more, a retail metric known as same-store sales, rose 5.1% in February versus forecasts for a rise of 2.4%.
Separately, the company said it is boosting its annual dividend by 15% to $1.09 from 95 cents per share. Wal-Mart (WMT, Fortune 500) shares rose 4%.
As a result of Wal-Mart, the overall retail sector is now expected to show a slight rise in February same-store sales, versus previous forecasts for a decline, according to Thomson Reuters.
Nonetheless, many retailers continued to see weaker sales, due to the impact of the slowing economy and growing joblessness.
Wal-Mart rival Target (TGT, Fortune 500) said sales fell 4.1%, sending shares 2% lower.
Abercrombie & Fitch (ANF) said same-store sales plunged 30% in the month, sending shares of the clothing retailer down 14.5%. Nordstrom (JWN, Fortune 500) said sales fell 15.4%, sending shares of the department store chain down more than 8.5%.
Gymboree (GYMB) warned late Wednesday that first-quarter profit will miss forecasts and same-store sales in the quarter will slide 20% to 25%. Shares of the children's clothing retailer plunged 27% Thursday morning.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 11 to 1 on volume of 900 million shares. On the Nasdaq, decliners topped advancers four to one on volume of 1.21 billion shares.
Economy: January factory orders fell 1.9% after dropping 4.9% in the previous month. Economists surveyed by Briefing.com thought orders would fall 3.5%.
The number of Americans filing new claims for unemployment fell to 639,000 last week from 670,000 in the previous week, versus economists' forecasts for a drop to 650,000.
Another report showed that fourth-quarter business productivity was weaker than initially reported, falling at a revised 0.4% annual rate versus the initially reported 3.2% annual rate. Economists thought it would grow at a 1.1% annual rate.
Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.82% from 2.98% Wednesday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate held steady at 1.28%, unchanged from Wednesday, while the overnight Libor rate rose to 0.32% from 0.31%, according to Bloomberg.com. Libor is a bank-to-bank lending rate.
Other markets: In global trading, most Asian markets ended lower with the exception of the Japanese Nikkei. European markets tumbled.
In currency trading, the dollar gained versus the euro and fell against the yen.
U.S. light crude oil for April delivery fell $1.77 to settle at $43.61 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose $21.10 to settle at $927.80 an ounce.
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