Stocks ended sharply lower today following escalating worries about the financial and automotive sectors and rebounding oil prices. The major indexes all...
NEW YORK — Stocks ended sharply lower today following escalating worries about the financial and automotive sectors and rebounding oil prices. The major indexes all logged declines of more than 1.5 percent, and the Dow Jones industrial average ended below the 12,000 mark for the first time since mid-March, when the market was worried about Bear Stearns collapsing.
The Dow slumped 220.40 to 11,842.69. The blue chips haven’t closed below 12,000 since March 17.
Microsoft, one of the 30 Dow stocks, slipped 70 cents to close at $28.23. Boeing, also a Dow stock, fell $1.12 to $75.83.
Broader stock indicators also dropped today. The Standard & Poor’s 500 index fell 24.90 to 1,3187.93, and the Nasdaq composite index fell 55.97 to 2,406.09.
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While investors have seen other triple-digit declines in the past year since concerns about the economy began emerging, the blue chips’ finish under 12,000 could give investors a psychological blow.
Rumors added to the market’s anxiety, which ballooned Thursday when Citigroup warned of significant debt markdowns for the second quarter, Washington Mutual announced 1,200 job cuts and Moody’s Investors Service decided late in the day to downgrade the two biggest bond insurers.
Troubling news about the financial sector has been piling up all week, driving the stock market back toward the levels it plummeted to in March. Earlier this week, investment banks posted profit declines, Fifth Third Bancorp said it need to raise $2 billion in capital, and two Bear Stearns hedge fund managers were charged with lying to investors — causing many investors to flee from stocks.
“There has to be reticence about getting back in,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group. “It’s definitely an ugly end to the week.”
The session also saw “quadruple witching” — the simultaneous expiration of four types of options contracts — that can lead to heavy trading near the start and end of the session. It could be contributing to the steepness of the day’s pullback and was adding to volume.
As the economy faces a tight lending climate, it also struggles with surging fuel costs. Crude oil futures jumped $2.69 to settle at $134.62 a barrel on the New York Mercantile Exchange, recovering some of Thursday’s drop of nearly $5 a barrel on news of a fuel price hike in China.
Investors are awaiting this weekend’s meeting in Saudi Arabia of oil producers and consumer nations, which could bring some relief to the problem of soaring oil prices. But many analysts believe the gathering might end up being a mere finger-pointing session.
Overseas, Japan’s Nikkei stock average dropped 1.3 percent. Britain’s FTSE 100 fell 1.5 percent, Germany’s DAX index declined 2.1 percent, and France’s CAC-40 fell 1.8 percent.