New York: US stocks slid within striking distance of the November bear-market low on Tuesday, as grim manufacturing data signaled the recession is worsening and warnings on risks facing European banks underscored the continuing toll of the financial crisis.
Financial stocks sank to 14-year lows after Moody’s Investors Service said banks could be hit by the recession in Eastern Europe, pulling the S&P Financial index down 8%.
Data showing a sharp contraction in Japan’s economy set the tone early in the day and helped yank oil prices down nearly 7% to below $35 a barrel. Chevron and Exxon Mobil were the Dow’s biggest drags, sliding more than 4%.
“As we retest these November lows, the reality that sets in is that we may have another leg to go down in the economy and the market,” said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
US banks, already beaten down by the failure of efforts to save the financial system to take hold yet, slid. Dow component JPMorgan was down 12.3% at $21.65 and Wells Fargo dropped 13.1% to $13.69.
The Dow Jones industrial average fell 297.81 points, or 3.79%, to 7,552.60. The Standard & Poor’s 500 Index gave up 37.67 points, or 4.56%, at 789.17. The Nasdaq Composite Index lost 63.70 points, or 4.15%, to 1,470.66.
The day’s losses brought the Dow down 13.9% since the start of the year, while the S&P 500 is down 12.6% and the Nasdaq has fallen 6.7%.
A report showing that manufacturing production in New York state fell to a record low in February stirred worries about the deepening recession and added to fears that the new US economic stimulus package won’t be a quick fix.
US President Barack Obama signed the $787 billion economic stimulus bill into law on Tuesday, but investors are fearful that the plan will not blunt the impact of the recession soon enough. The White House hopes the package will save or create 3.5 million jobs.
Energy shares slid alongside oil, with Exxon Mobil down 4.4% at $71.28 and Chevron fell 5.1% to $66.18. The S&P energy index dropped 6.3%.
General Motors Corp shares shed 12.8% to $2.18 as GM and Chrysler prepared to submit a survival plan under the terms of the $17.4 billion government bailout that has kept the automakers afloat this year.
Sentiment was further dampened by news that the Securities and Exchange Commission had charged Houston-based Stanford Financial Group with massive alleged fraud involving a multibillion-dollar investment scheme that stretched from Texas to Antigua and around the world.
Wal-Mart was the only positive stock among the 30 components of the Dow industrials after the discount retailer posted a quarterly profit that beat Wall Street’s forecasts. Wal-Mart rose 3.7% at $48.24.