Stocks fall sharply amid credit concerns
NEW YORK » Wall Street suffered its second big drop in a week yesterday, with investors worried about spreading fallout from the credit crisis at banks and about a dollar that just keeps getting weaker.
The Dow Jones industrial average fell more than 360 points -- just about matching its plunge of last Thursday.
A passel of worries tormented investors, including the dollar, which swooned amid speculation that China will seek to diversify some of its foreign currency stockpiles beyond the greenback.
Meanwhile, a record loss from General Motors Corp. owing to an accounting adjustment further dragged on sentiment. The stock fell $2.21, or 6.1 percent, to $33.95.
The 13-nation euro hit a fresh record against the dollar -- rising to $1.4729 -- before falling back.
The dollar fell not only against the euro but in Asia following a report that a senior Chinese political figure said China should diversify its $1.43 trillion foreign exchange reserves into the euro and other strong currencies.
The Dow fell 360.92, or 2.64 percent, to 13,300.02.
The Dow, which had gained 117 points Tuesday, had fallen 362.14 last Thursday, reflecting the extreme fractiousness on Wall Street these days.
Broader stock indicators also pulled back yesterday. The Standard & Poor's 500 index fell 44.65, or 2.94 percent, to 1,475.62 -- moving below the psychological benchmark of 1,500. The Nasdaq composite index fell 76.42, or 2.70 percent, to 2,748.76.
The Russell 2000 index of smaller companies fell 25.81, or 3.22 percent, to 775.96.
A drop in the NYSE composite index proved steep enough to trigger trading curbs, which puts restrictions on certain kinds of sell orders and are meant to help stabilize the market.
"We've been seeing a bit of a tug of war," said Tim Swanson, chief investment officer at National City's Private Client Group. "On one side we've got the forces of globalization and on the other side we've got woes from housing and largely related credit concerns," he said.
"As we see volatility on a day-by-day basis it's these two forces duking it out trying to see which ultimately will prevail."
Declining issues outnumbered advancers by about 10 to 1 on the New York Stock Exchange, where volume came to 1.66 billion shares compared with 1.50 billion shares traded Tuesday.
The euro's rally put it well above the $1.4554 the currency bought late Tuesday in New York. The previous record high, also set Tuesday, was $1.4571.
Government bonds jumped as the dollar fell and as investors transferred money from stocks to fixed-income investments.
The yield on the 10-year Treasury note, which moves opposite its price, fell to 4.34 percent from 4.37 percent late Tuesday.
Light, sweet crude fell 33 cents to settle at $96.37 per barrel on the New York Mercantile Exchange after the government reported inventories fell less than expected last week while refinery utilization remained flat.
December gold rose but also came off its highs, adding $10.10 to settle at $833.50 an ounce on the Nymex.