New York: The Dow industrials closed at a more than six-year low on Thursday as investor fears that banks could be nationalized drove their stocks to a 17-year low and a rise in the number people receiving jobless benefits to a record high stoked worries about the deepening recession.
After several near misses this week, blue chips blew through the 20 November bear market closing low in late trade, erasing a year-end rally built on hopes a new president would successfully tackle the deepening recession.
The Nasdaq fared the worst of the three major indexes after a disappointing outlook from Hewlett-Packard Co sent its stock down almost 8% and dragged down other technology shares, Hewlett-Packard, the world’s largest PC maker, which warned its expects weak market conditions to persist, was also the Dow’s biggest negative weight.
Shares of major banks tumbled on concerns about government plans to mop up bad assets from their books. The KBW banks index fell to its lowest level since 1992, led by a 14% slide in Bank of America shares.
Economic bellwether General Electric, whose operations include a big financial unit, tumbled more than 4% and briefly traded below $10 for the first time since 1995, adjusted for stock splits.
The Dow Jones industrial average lost 89.68 points, or 1.19%, to close at 7,465.95, after setting an intraday bear market low of 7,447.55. The Standard & Poor’s 500 Index .SPX gave up 9.48 points, or 1.20%, to 778.94. The Nasdaq Composite Index .IXIC was down 25.15 points, or 1.71%, at 1,442.82
Since the start of the year, the Dow has fallen nearly 15%.
The S&P, which suffered a fourth straight day of losses on Thursday that marked its longest losing streak since October, has lost close to 14% for the year. The broad S&P is now up almost 4% from its November lows after entering the year up about 20% from those levels.
Analysts noted that despite the new lows, the market had not seen the rapid sell-offs that were characteristic of October and November and volume was light, indicating a lack of conviction
Investors fretted about the deteriorating economy after reports showing a record high in the number of workers continuing to claim jobless benefits in the first week of February and a sharp contraction in factory activity in the Mid-Atlantic region.
Among the losers in financials, the sector that has been at the heart of the credit crunch and global economic down turn, Bank of America was down 14% at $3.93, while Citigroup lost 13.8% to $2.51.