Dow Slides to New 6-Year Lows, Led by Financials, at 7,259, down 207

NEW YORK (AP) — Stocks tumbled again on Wall Street Friday, leading a worldwide rout, as investors lost even more confidence in the ability of U.S. banks to right themselves.

Investors again pummeled the shares of financial bellwethers Citigroup Inc. and Bank of America Corp., sending them down 21 percent and 18 percent respectively in early afternoon trading.

Poor earnings reports from Lowe’s Cos., a major home improvement retailer, and department store chain J.C. Penney Co. gave the latest stark indicator of trouble in the broader economy.

The Dow Jones industrials fell 128.39, or 1.72 percent, to 7,337.56. On Thursday, the Dow fell to its lowest level since Oct. 9, 2002, the depths of the last bear market.

The Standard & Poor’s 500 index tumbled 13.32, or 1.71 percent, to 765.62, while the Nasdaq composite index fell 8.39, or 0.58 percent, to 1,434.43.

The sell-off followed steep drops in other major markets in Europe and Asia. Germany’s DAX and France’s CAC-40 each fell more than 4 percent, and Tokyo’s Nikkei fell 1.9 percent and the Hang Seng in Hong Kong fell 2.5 percent.

Stocks have fallen steadily over the past two weeks as investors lost confidence in multiple Obama administration programs aimed at bolstering the economy. Just this week the government finalized two major initiatives, a massive fiscal stimulus package and a relief plan for homeowners.

“There’s perceived disappointment from the lack of clarity from the Treasury (Department) for what it will do with the financial sector,” said Wasif Latif, portfolio manager at USAA Investment Management Co. “That’s hitting financials regularly.”

Both Citi and Bank of America, which also got hammered on Thursday, have been among the hardest hit by the ongoing turmoil in the industry and received multiple multibillion investments from the government.

Citi shares tumbled 53 cents to $1.98 while Bank of America, which touched a 25-year low earlier in the day, sank 68 cents to $3.25.

As investors dropped out of stocks, safer instruments like Treasury debt and gold rose. The price of the benchmark 10-year Treasury note rose sharply, sending its yield down to 2.72 percent from 2.86 percent. Gold jumped 3 percent to $1,005.60 per ounce.

A pair of poor earnings reports Friday only worsened sentiment about the economy. Lowe’s said fourth-quarter profit dropped 60 percent after customers cut back on spending and the company gave a full-year profit estimate that disappointed investors. Department store chain J.C. Penney said profits tumbled 51 percent.

“There’s still a big fear factor syndrome,” said Michael Strauss, chief economist and market strategist at Commonfund. “There is a focus on what is happening here and now instead of six months to nine months from now.”

Declining issues outnumbered advancers by about nine to one on the New York Stock Exchange, where volume came to 803.59 million shares.

The Russell 2000 index of smaller companies declined 8.75, or 2.10 percent, to 407.96.

Other world indicators also fell. Britain’s FTSE 100 declined 3.18 percent, Germany’s DAX index tumbled 4.76 percent, and France’s CAC-40 fell 4.25 percent.

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