It was just a few weeks ago that Wall Street seemed ready for a rebound after months of turbulence. Then came an eerily familiar flood of disappointments: oil at another record high, banks battling with credit losses, home prices tumbling further and automakers struggling.
NEW YORK — It was just a few weeks ago that Wall Street seemed ready for a rebound after months of turbulence.
Then came an eerily familiar flood of disappointments: oil at another record high, banks battling with credit losses, home prices tumbling further and automakers struggling.
The stock market’s hopes for recovery now appear to have been premature. That realization sent stocks tumbling, taking the Dow Jones industrials down nearly 360 points Thursday to their lowest level since September 2006.
New signs of trouble in the financial, high-tech and automotive sectors rattled investors. Their discomfort was exacerbated by oil futures soaring past $140 a barrel after the head of OPEC predicted the price of a barrel of crude could rise well over $150 this year and after Libya said it may cut oil production.
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The Dow Jones industrial average slid 358.41, or 3 percent, to close at 11,453.42, well under its 2008 trading low of 11,634.82. The blue-chip index is now 19 percent below its record close last October of 14,164.53.
Microsoft, one of the 30 Dow stocks, retreated 60 cents to close at $27.75 a share. Boeing, also a Dow stock, fell $1.43 to $68.30, a 52-week low.
Broader stock indicators also fell sharply but did not plumb the low levels they reached in mid-March. The Standard & Poor’s 500 index dropped 38.82, or 2.94 percent, to 1,283.15, and the technology-laden Nasdaq composite index declined 79.89, or 3.3 percent, to 2,321.37.
The Dow and the S&P, which is off 18 percent from its highs of last fall, are close to the prolonged 20 percent decline that traditionally indicates a bear market.
Many analysts would argue Wall Street has had a bear-market mentality for months.
A stream of bad news drove home to investors how much U.S. companies still stand to be hurt by the prolonged housing slump, the nearly year-old credit crisis and the soaring price of oil.
Negative analyst comments on General Motors drove shares of the largest U.S. automaker to their lowest level in more than 30 years.
Citigroup stock fell sharply after an analyst give it a “sell” rating and warned investors to expect less from the brokerage sector in an uneasy economy.
Disappointing forecasts from technology bellwethers Oracle and BlackBerry maker Research In Motion further soured investors’ moods and made the tech sector one of the steepest decliners.
The unnerving forecast about oil prices raised the specter of higher inflation and more damage to the economy.
OPEC President Chakib Khelil was quoted as telling a French television station that oil could rise to between $150 and $170 per barrel this summer before pulling back later in the year.
That and a falling dollar helped send light, sweet crude as high as $140.39 and to a record settlement of $139.64 on the New York Mercantile Exchange.
All the bad news overshadowed a report by the National Association of Realtors that sales of existing homes edged up in May for only the second time in the past 10 months.
The great fear on Wall Street has been that rising prices and worries about their finances will force Americans to curb spending and reinforce the economic decline.
That fear was backed up by the latest reading on the gross domestic product. The Commerce Department said the economy grew at a 1 percent annual rate in the first quarter — a slight improvement from earlier estimates but still anemic. And that number does not reflect the impact of higher gas and oil prices that shot up further during the second quarter, which ends Monday.
“This is unfortunately kind of a slack period. We’re waiting for second-quarter earnings,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, pointing to the uptick in housing sales. “Until then, we have this very negative attitude among investors and everyone seems to be latching on to negative news and shrugging off the positive news.”
Bond prices rose sharply. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.06 percent from 4.10 percent late Wednesday.
GM, one of the 30 stocks that comprise the Dow industrials, sank $1.38, or 11 percent, to $11.43. They sank as low as $11.21 earlier in the session — tying the low reached on Dec. 30, 1974, according to the University of Chicago’s Center for Research in Security Prices. The center adjusts prices for stock splits.
A Goldman Sachs analyst cut his rating on the stock to “sell” and lowered ratings on several auto suppliers.
Citigroup fell more than 6 percent, down $1.18 to $17.67, after Goldman downgraded it. It also downgraded Merrill Lynch, which fell $2.41, or about 7 percent, to $33.05. Goldman itself fell $7.39, or 4 percent, to close at $176.26.