Dow Ends Below 8,000, More Than 5-Year Low
Stocks plunged to a more than five-year low amid worries about the fate of the auto industry — and the economy — as a bailout for the sector grows increasingly unlikely.
The Dow Jones Industrial Average tumbled 427.47, or 5.1 percent, to close at 7997.28. The last time the Dow ended below 8,000 was in March 2003.
The S&P 500 index shed 6.1 percent to close at 806.58, while the Nasdaqlost 6.5 percent to close at 1386.42.
"The uncertainty around the auto makers is weighing heavy" on the market, Tim Mole, head of CFD's at SVS Securities, told CNBC. It's a "gauging point of the U.S. economy," he added.
Senate negotiators today sought to craft a compromise bailout planto help distressed auto makers as lawmakers pressed the heads of the Big Three to justify the need for urgent assistance.
Shares of General Motors shed 9.7 percent to $2.79, its lowest close in more than 65 years. Ford tumbled 25 percent to $1.26, its lowest close in nearly 26 years.
In the past 12 months, GM shares have lost more than 90 percent of their value and Ford is down more than 80 percent.
Financials were the hardest hit -- down a whopping 12 percent -- amid worries about the impact of the worsening credit and economic situation on banks.
Dow components Bank of America, JPMorgan Chase and Citigroup all fell to multiyear lows.
Citigroup plunged 23 percent to $6.40, a 13-year low, as investors continued to punish the stock amid concerns that the 52,000 job cuts announced this week indicate worse management than previously thought. Year to date, Citigroup shares are down nearly 80 percent.
Bank of America fell 14 percent to close at $13.06, and JPMorgan dropped 11 percent to close at $28.47.
Call it The Day the Demon Rang the Bell: Today's stomach-turning drop came after Gene Simmons, the bass guitarist from Kiss whose tongue-unfurling, blood-spitting character was known as the "Demon," rang the opening bell on Wall Street.
(Click on the video at left to see Simmons ring the opening bell.)
Yahoo took another dive, falling 21 percent, after CEO Jerry Yang stepped down and as Microsoft CEO Steve Ballmer emphasized that the software giant was only interested in buying the company's search business, not the whole company.
Chip stocks got hammered, with AMD and Micron Technology both down more than 15 percent. Dow component Intel lost 4.7 percent.
In economic news, consumer prices fell 1 percentin October, the biggest drop since 1947. Excluding volatile food and energy costs, core CPI slipped 0.1 percent. Both gauges fell more than expected.
Meanwhile, housing starts came in worse than expected, falling 4.5 percentto a record 791,000 annual rate. It was the lowest reading since the measure was created in the late 1940s. An earlier report showed mortgage applications fell to their lowest level in nearly eight yearslast week.
Crude fell below $54 a barrel after the EIA reported that crude inventories increased by 1.6 million barrels last week, twice of what economists had expected.
BJ's Wholesale reported its profit rose 24 percentas discount stores continued to benefit from shoppers' tightening grip on their purse strings. The wholesale club also raised its full-year forecast. Its shares fell slightly.
One note about Tuesday's trading: After several failed attempts at a rally, stocks seemed to take off out of nowhere right around 3 p.m., propelling stocks to a solid gain. Art Cashin, floor director at UBS, called it "The Bud Hypothesis," suggesting that the Inbev takeover of Anheuser-Busch, which closed yesterday, meant that index funds had to redeploy their investments in Anheuser stock into the 499 other stocks in the S&P 500.
Stericycle replaced Anheuser in the S&P 500. Shares of the medical-waste-removal firm closed down 3.1 percent.
Still to Come:
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed manufacturing survey; natural gas inventories; Fed's Bullard speaks; Earnings from Gamestop, Dell and Gap
FRIDAY: Fed's Plosser speaks; Earnings from Heinz
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