Dow Hits 6-Year Low as Banks Tank
Stocks tumbled Thursday as anxiety over how the Obama administration will fix the crippled financial system pushed the Dow to its lowest level in more than six years.
The Dow Jones Industrial Average shed 89.68, or 1.2 percent, ending at 7,465.95, its lowest close since October 2002.
The S&P 500lost 1.2 percent to end at 778.94, while the Nasdaq dropped 1.7 percent to close at 1,442.82.
Wall Street wants details from the Obama administration to quell fears of bank nationalization and a wipeout of shareholder value but all it's getting is broad strokes.
The only details the administration has provided have been on the mortgage plan and let's just say, that hasn't gone over well.
>> Traders' Mortage Revolt: Watch the clip from the Chicago Mercantile Exchange that everyone is talking about. Plus, vote now: Would you join the protest?
There was plenty of bad news weighing on the market: A dismal manufacturing report and weak outlook from Hewlett-Packard.
“There’s no question that we’re going through a testing process. The market is just focusing on negative news and ignoring the positive news,” Peter Cardillo, chief market economist at Avalon Partners, explained, citing the market’s indifference to today’s jump in leading indicators.
The real problem, Cardillo said, is that none of the Obama administration’s stimulus plans explain how the nation’s financial system will be fixed. The market “will continue to ignore any good news until the banking system is fixed,” he said.
Another factor that’s weighing on the market, Cardillo noted, is tomorrow’s options expirations. “With the absence of retail buyers … it’s accelerating the downward trend,” he said.
Bank of America and Citigroup were the biggest decliners on the Dow, dropping about 14 percent each. BAC ended at $3.93 and Citigroup closed at an all-time low of $2.51.
American Express also closed at a new low, falling 8.7 percent to $12.87.
Hewlett-Packard dropped 7.9 percent after the hardware and software maker missed sales expecations and cut its full-year profit outlook.
Other big-cap techs also declined, including Intel and Dell , which lost 5.1 percent and 6.1 percent, respectively.
Apple shares skidded 4 percent after NPD Group reported that sales at the computer and iPod maker's retail stores fell 6 percent in January, the first drop in three years.
Procter & Gamble advanced after European rival Nestle beat its 2008 sales target and was cautiously upbeat for 2009.
Sprint shot up 20 percent following news that the wireless-service provider has the exclusive rights to sell Palm's highly-anticipated Pre phone, described as a viable challenger to Apple's iPhone, through the end of 2009. Palm shares fell 3.5 percent.
Oil jumped to near $39 a barrel, giving energy stocks like ExxonMobil a boost, even as Barclays cut the energy leader to "market weight."
Markets in Europe provided some encouragement to bulls, rising in morning trading. Bank stocks climbed, led by UBS, which gained more than 3 percent after it agreed to pay $780 million to the U.S. to settle allegations of aiding tax fraud.
Markets in Asia finished mostly higher.
In economic news, the Philadelphia Fed branch reported its gauge of regional manufacturing activity plunged to minus-41.3in February from minus-24.3 in January. Economists had expected a much smaller drop to minus-25.
Meanwhile, leading indicators rose by 0.4 percent in January, double the December level, while producer prices jumped 0.8 percent in January and core PPI shot up 0.4 percent. Jobless claims were unchangedat 627,000 last week.
Still to Come:
FRIDAY: CPI; Earnings from JCPenney and Lowe's
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