Stocks extend plunge; Dow falls 307 points
NEW YORK » Wall Street extended its 2008 plunge yesterday, tumbling after a regional Federal Reserve report showed a sharp decline in manufacturing activity and as investors feared that downgrades of key bond insurers could trigger further trouble with souring debt.
The Dow Jones industrial average lost more than 300 points, or nearly 2.5 percent, and skidded to its lowest close since March 16.
The Standard & Poor's 500, the index closely watched by market professionals, fell nearly 3 percent.
Stocks opened higher but quickly gave up their gains after the Philadelphia Federal Reserve said its survey of regional manufacturing activity registered a negative 20.9 from a revised reading of negative 1.6 in December.
The reading came in well short of what Wall Street had been expecting and underscored the seriousness of the economic concerns that have gripped both Wall Street and Washington in recent weeks.
Credit concerns also dogged Wall Street after rating agency Moody's Investors Service placed bond insurer Ambac Assurance Corp. on review for a possible downgrade.
That possibility alarmed Wall Street because it would place all bonds insured by Ambac on review as well.
Ratings agencies are concerned that bond insurers would be unable to absorb a spike in claims.
The Dow, which had been up more than 50 points early in the session, closed down 306.95, or 2.46 percent, at 12,159.21.
The Dow is now off 8.33 percent for the year; there have been just 12 trading days so far in 2008, but the index's frequent triple-digit losses have now forced it to give back its 2007 gains.
The Dow had its lowest close since it ended the March 16, 2007, session at 12,110.41.
The Dow's decline also left it about 150 points above 12,000, a level it hasn't closed below since November 2006.
The broader market indi-cators also plummeted. The S&P 500 index lost 39.95, or 2.91 percent, closing at 1,333.25, and leaving it was a year-to-date loss of 9.2 percent, while the Nasdaq dropped 47.69, or 1.99 percent, to 2,346.90, giving it a 2008 deficit of 11.51 percent.
Yesterday brought the lowest close for the S&P 500 since October 2006 and the worst for the Nasdaq since March of last year.
Declining issues outnumbered advancers by more than 5 to 1 on the New York Stock Exchange, where volume came to a heavy 2.17 billion shares compared with 2.11 billion traded Wednesday.
The Russell 2000 index of smaller companies fell 19.34, or 2.76 percent, to 680.57.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.61 percent from 3.68 percent late Wednesday.
The dollar was mixed against other major currencies.
The Chicago Board Options Exchange's volatility index, known as the VIX, and often referred to as the "fear index," jumped nearly 17 percent Wednesday.
Light, sweet crude fell 71 cents to settle at $90.13 a barrel on the New York Mercantile Exchange.