Stocks plunged for a second straight day today, falling to a ranges not seen in six years as financial and energy stocks tumbled and as...
NEW YORK — Stocks plunged for a second straight day today, falling to a ranges not seen in six years as financial and energy stocks tumbled and as demand for the safety of government debt spiked to historic levels.
The Dow Jones industrial average closed down 444.99, or 5.6 percent, at 7,552.29. The decline brings the Dow’s two-day decline to 873 points.
The Standard & Poor’s 500 index tumbled 54.14, or 6.7 percent, to 752.44, below the low of 776.76 logged on Oct. 9, 2002. The Nasdaq composite index declined 70.30, or 5.1 percent, to 1,316.12.
Declining issues outnumbered advancers by about 10 to 1 on the New York Stock Exchange, where volume came to 2.23 billion shares.
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Stocks, which had been weak for much of the session, lost ground after hopes faded that lawmakers would soon put together an aid package for the U.S. automakers and as major indexes breached key technical thresholds. That sent a shudder through the market and touched off further selling
Financial stocks plunged on worries that the government’s financial rescue won’t be sufficient to cover banks’ losses. Meanwhile, a sharp drop in oil prices weighed heavily on energy companies.
Today’s pullback came amid heavy volume, a welcome sign for some investors who are looking for the market to experience a cathartic sell-off that could lay the groundwork for a recovery. Heavier volume can signal investors are scared enough to sell rather than simply sitting on the sidelines, which can result in relatively light volume.
Observers said, however, that the selling was as much to do with entrenched pessimism about the prospects for many corners of the economy.
“Unrelenting gloom has taken over the markets,” said Dana Johnson, chief economist at Comerica. “The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market.”
“Back in October we were looking at a potential catastrophic meltdown of the credit markets, and that didn’t happen,” he said. “But that doesn’t mean tremendous damage hasn’t been done to the economy.”
Gus Scacco, managing director at AG Asset Management, said investors can’t manage to regain confidence as the market continues to plumb new depths. Stocks fell to their lowest level in more than five years on Wednesday.
“We’re trying to make a bottom but we keep breaking through,” he said.
Bond prices showed stunning advances as investors clamored for the safety of government debt. The yield on the benchmark 10-year Treasury note fell to 3.14 percent from 3.32 percent late Wednesday. Bond yields move opposite their price. The yield on the three-month Treasury bill, considered one of the safest assets around, fell to 0.03 percent from 0.06 percent late Wednesday.
Light, sweet crude for December delivery fell 7 percent, or $4, to settle at $49.62 on the New York Mercantile Exchange.