The banking giant Citigroup commanded a stock price of $55 just two years ago. But at one point Thursday, as markets hurtled to their lowest close in 12 years, the shares were worth less than an item at the Dollar Store.
After months of breathtaking declines, this is what Wall Street has come to: Blue-chip companies, once considered safe investments and cornerstones of the economy, are akin to penny stocks.
The bear market is tightening its grip, despite efforts by the government to support the economy and some of its biggest companies. Fears about the depth and breadth of the recession drove the Dow Jones industrial average down another 4 percent on Thursday, bringing its losses so far this year to 25 percent — just shy of the 33 percent decline recorded for all of 2008.
“It borders on unbelievable,” said Glenn W. Tyranski, senior vice president for financial compliance at NYSE Regulation. “You’re seeing companies that are just really suffering across the board.”
The number of companies trading at $10 or less on the Standard & Poor’s 500-stock index has increased tenfold since the market reached a peak in October 2007. And with no end in sight to the downward spiral, the New York Stock Exchange has temporarily suspended its $1 minimum share-price requirements to prevent a wave of delistings.
A share of General Motors stock, which fell below $2 on Thursday as it warned of possible bankruptcy, is now not even enough to buy a gallon of gasoline for your Chevy.
A share of General Electric, (the parent company of CNBC) battered this week to little more than $6, would not be sufficient to buy two of the company’s compact fluorescent light bulbs. And at its current price of 73 cents, it would take several shares of Office Depot stock to buy a box of paper clips.
The Dow Jones industrial average closed at 6,594.44, down 281.40 points, or 4.09 percent — its lowest close since April 15, 1997. The broader S.& P. 500 fell 30.32 points, or 4.25 percent, to 682.55, its lowest close since September 1996. The Nasdaq composite index fell 4 percent, or 54.15 points, to 1,299.59.
The rout highlighted the apathy and pessimism that have seeped into all corners of the market as the global economic downturn deepens.
Investors had bid up shares on Wednesday on hopes that China would increase spending to shore up its unraveling economy, but sold off after the Chinese government swatted away those rumors. With so much uncertainty, investors are parachuting out of companies like banks, retailers and utilities, and abandoning stock markets everywhere from Asia to Europe to Wall Street.
Many are concerned the recession may gain force before it ebbs, especially as job losses increase, a worry that is likely to drive stocks into a downward trend over the next few months. Economists expect the unemployment rate for February to rise to 7.9 percent, from 7.6 percent in January, and they estimate that the economy shed 650,000 jobs last month. The Labor Department will release February’s unemployment numbers at 8:30 a.m. on Friday.
“It’s just a continuing self-destructive market where even the slightest good news is considered negative,” said Peter I. Cardillo, chief market economist at Avalon Partners. “No one is taking a back-seat approach. Everyone is just selling.”
Financial stocks continue to be among the worst hit, despite the trillions that governments around the world are spending to restore the system to working order. Citigroup, which is fending off fears of outright nationalization, broke the buck Thursday, falling as low as 97 cents before closing at $1.02. Bank of America, also the recipient of two government lifelines, slid to $3.17.
“We’re collapsing in on ourselves,” said Eric Ross, director of research at the brokerage firm Canaccord Adams. “Nobody wants to be invested, that’s the problem. I don’t believe we’re at the bottom yet.”
The steep drop in stocks like G.E., which has fallen nearly 60 percent since the start of the year, also suggests that investors are worried about another big failure in the financial system akin to the collapse of Lehman Brothers and the American International Group in September, said Russell Napier, a consultant at Credit Lyonnais.
“Ninety-nine percent of the people I talk to are pessimistic,” Mr. Napier said. “Everyone is sitting back and waiting for one more big implosion.”
Investors have grown increasingly worried about General Motors, which has borrowed $13.4 billion from the federal government and is seeking billions more. The auditor for G.M., Deloitte & Touche, said Thursday that G.M.’s survival was in “substantial doubt.”
Auto stocks sank across the board, while shares of G.M. tumbled 15 percent, or 34 cents, to $1.86. This week, the big automakers reported that their February sales fell 41 percent from the previous year as consumers slashed their spending.
“You really do wonder how they’re going to keep going with such pathetic sales and massive fields of unsold cars, and what’s going to happen,” said Robert Carnell, chief international economist at ING Financial Markets. “Just kind of seems obvious that this industry has to shrink.”
A broad slowdown in consumer spending was also evident as retailers began to release February results on Thursday morning. But the numbers were not as bad as January’s, and Wal-Mart Stores topped expectations by reporting that its February sales rose 5.1 percent. Shares of Wal-Mart rose $1.26, or 2.6 percent, to $49.75.
Investors fleeing stocks sent the price of safe-haven Treasury debt higher. The Treasury’s 10-year note rose 1 13/32, to 99 15/32. The yield, which moves in the opposite direction from the price, fell to 2.81 percent, from 2.97 percent late Wednesday.