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US stocks dive to 7550, erasing 10 years' gains

(chinadaily.com.cn/agencies)
Updated: 2008-11-21 09:13

US stocks plunged for a second day Thursday in New York, as a ferocious selling by investors unnerved by tumbling economic fundamentals, drove the benchmark Standard & Poor's 500 index to its lowest level since 1997, effectively completing the wipe-out of more than a decade of stock market gains.

Traders work on the floor of the New York Stock Exchange, November 20, 2008. US stocks plunged yet again on Thursday, as a frantic flight from risk prompted by investors' deepening economic fears drove the benchmark Standard & Poor's 500 index to its lowest level since 1997 -- completing the erasure of more than a decade of stock market gains. [Agencies]

The S&P 500, a broadest indicator of the US economy,is now 52 percent below its October 2007 record high. The nosedive is exceeded only by the 83 percent drop during the Great Depression between 1930 and 1932.

The Dow Jones industrial average plunged 444.99 points, or 5.56 percent, to 7,552.29. The S&P's 500 lost 54.14 points, or 6.71 percent, to 752.44. The Nasdaq Composite Index slid 70.30 points, or 5.07 percent, to 1,316.12.

The latest flight of money from the markets was led by the year's weakest links: a worsening performance of nearly all the banks, commodity producers and car makers, in the Western developed countries.

Financial stocks plunged on worries that the US government's financial rescue won't be sufficient to cover banks' losses. And, a sharp drop in crude prices weighed heavily on energy companies.

Thursday's pullback came amid heavy volume, reflecting investors being scared enough to sell rather than simply sit on the sidelines, which can result in relatively light volume. Observers said the selling highlighted the entrenched pessimism about the prospects for the world economy, the United States, especially.

"Unrelenting gloom has taken over the markets," said Dana Johnson, chief economist at Comerica Inc. "The economic news, the concerns about some major financial institutions, the concerns about the auto sector, earnings reports, everything is coming out in a way that is just provoking a massive selling in the stock market."

Investors who have been groping for a bottom to the yearlong market rout have been worried that Washington's disagreements over whether to bail out the deeply troubling auto industry could lead to bankruptcies that would cascade into other industries and throw perhaps millions of workers out of work.

Analysts said the worries about the automakers are only one of many concerns for the market. Growing anxiety over Citigroup Inc.'s stability also battered stocks.

Citigroup tumbled below $5 a share Thursday -- their lowest level in more than 15 years, after investors found little solace in a Saudi prince's decision to boost his stake in the bank to 5 percent. The move failed to galvanize confidence among increasingly anxious investors concerned that Citigroup, which has racked up more than $20 billion in losses over the past four quarters, will post another large loss in the fourth quarter. Citigroup fell $1.69, or 26 percent, to close at $4.71.

Other financials showed big drops. JPMorgan Chase & Co. fell $5.09, or 18 percent, to $23.38, and Bank of America Corp. fell $1.81, or 14 percent, to $11.25.

On Thursday, the price of oil hurtled below $50 abarrel, taking energy shares with it as dismal US economic data intensified concerns of a long and deep global recession, crushing fuel demand expectations. Chevron tumbled more than 8 percent.