Wall Street retreated sharply today on more signs of economic weakness and executive shake-ups at two major banks — Washington Mutual...
NEW YORK — Wall Street retreated sharply today on more signs of economic weakness and executive shake-ups at two major banks — Washington Mutual and Wachovia — reminders of the ongoing fallout from the credit crisis.
The Dow Jones industrial average closed down 134.50 points at 12,503.82, after gaining last week on better-than-expected economic data and a pullback in oil prices. The blue-chip index had been down more than 200 points earlier in today’s session.
Microsoft, one of the 30 Dow stocks, fell 56 cents to close at $27.76 a share. Boeing, also a Dow stock, declined $1.63 to $81.14.
Broader stock indicators also dropped. The S&P 500 index fell 14.70 to 1,385.68. The Nasdaq composite index fell 31.13 to 2,491.53.
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The market drew no comfort from the ailing financial sector. As the financial system still contends with the aftermath of the nation’s prolonged credit problems, Wachovia Chief Executive Ken Thompson was forced out today, and Washington Mutual is taking the chairman’s role away from chief executive Kerry Killinger. Thompson has become the third CEO of a major U.S. financial institution to lose the top job as a result of the credit crisis.
Brian Gendreau, investment strategist for ING Investment Management, said the markets have been “hypersensitive about anything to do with credit” in recent months, and the combination of the S&P cuts, the bank news and comments in an overseas speech by U.S. Treasury Secretary Henry Paulsen weighed on the market.
“Basically, he suggested that there were further problems to come in the banking and financial sector,” Gendreau said. “That’s just toxic for stocks.”
Two key reports today also indicated that the economy is still struggling. As expected, the Institute for Supply Management’s manufacturing index for May showed its fourth straight monthly decline, while the Commerce Department said construction spending dipped in April for the sixth time in seven months due to a drop in homebuilding.