Stocks plunged today, hurtling the Dow Jones industrials down to their lowest point in nearly two years as Wall Street contended with a...
NEW YORK — Stocks plunged today, hurtling the Dow Jones industrials down to their lowest point in nearly two years as Wall Street contended with a barrage of bad news: another surge in oil prices and warnings of trouble in the key financial, automotive and high-tech industries.
The Dow Jones industrial average slid 358.41, or 3.03 percent, to close at 11,453.42, well under its 2008 trading low of 11,634.82 and at its lowest level since Sept. 11, 2006.
Microsoft, one of the 30 Dow stocks, retreated 60 cents to close at $27.75 a share. Boeing, also a Dow stock, fell $1.34 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.
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The stock decline sent some investors rushing for the safety of Treasury bonds — government debt is regarded as a haven when the stock market is in turmoil. Bond prices rose sharply. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.05 percent from 4.10 percent late Wednesday.
The dollar was mixed against other major currencies, while the price of gold — an inflation hedge — jumped.
The passel of worries that investors juggled today added up to an increasingly troubled economy. Analysts’ negative comments on General Motors sent shares of the largest U.S. automaker to their lowest level in more than 30 years, while Citigroup fell sharply after an analyst placed a “sell” rating on the stock and warned investors to expect less from the brokerage sector in an uneasy economic climate.
Disappointing outlooks 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 gloom was compounded by an unnerving forecast about oil prices that raised the specter of higher inflation and even 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 a barrel this summer before pulling back later in the year. That and a falling dollar helped send light, sweet crude up $3.96 to $138.51 a barrel on the New York Mercantile Exchange.
Rising oil has saddled nearly all parts of the economy with higher costs, weighing on consumers who now have to reach much deeper into their wallets at the gas pump and therefore have less to spend elsewhere.
Today’s confluence of bad news overshadowed the National Association of Realtors’ report that existing home sales edged up last month, only the second increase in the past 10 months. It also wiped out any positive impact from the Federal Reserve’s widely expected decision Wednesday to leave interest rates unchanged.
The stream of downbeat assessments drove home to investors how much U.S. companies stand to be hurt from the fallout of the prolonged housing slump, the nearly year-old credit crisis and the soaring price of oil. The great fear on the Street has been that rising prices and worries about their finances will force consumers to further curb their spending, sending the economy into even more of a decline.
The latest reading on the gross domestic product today backed up that fear. The Commerce Department said the economy as measured by GDP rose at 1 percent annual rate in the first quarter, a slight improvement from the previous estimate of 0.9 percent, but still quite anemic. Moreover, the 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. Until then, we have this very negative attitude among investors and everyone seems to be latching onto negative news and shrugging off the positive news,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago, pointing to the uptick in housing sales.
Alexander Paris, economist and market analyst for Chicago-based Barrington Research, said the market’s drop appeared technical in nature — that Goldman Sachs’ downgrades might have triggered the selling, but that it was aggravated by end-of-the-quarter window dressing, in which institutions’ trades are designed to put their portfolios in the best light.
Meanwhile, he added, “second quarter estimates are still declining. There might be some nervousness about the earnings season coming up.”
Corporate news — and downcast statements about several important sectors — gave investors plenty to worry about.
GM, one of the 30 stocks that comprise the Dow industrials, sank $1.38, or 10.8 percent, to close at $11.43. A Goldman Sachs analyst cut his rating on the stock to “sell” and lowered ratings on several auto suppliers.
Citigroup fell $1.18, or 6.3 percent, to $17.67 after Goldman Sachs downgraded it. Goldman itself fell $7.39, or 4 percent, to close at $176.26.