Dow falls 358 points to near 2-year low
NEW YORK » It was just a few weeks ago that Wall Street seemed ready for a rebound following months of turbulence.
Then came an eerily familiar flood of disappointments: oil at another record high, banks battling with credit losses, home prices tumbling further and automakers struggling.
The stock market's hopes for recovery now appear to have been premature. That realization sent stocks tumbling, taking the Dow Jones industrials down nearly 360 points yesterday to their lowest level since September 2006.
New signs of trouble in the financial, high-tech and automotive sectors rattled investors. Their discomfort was exacerbated by oil futures soaring past $140 a barrel after the head of OPEC predicted the price of a barrel of crude could rise well over $150 this year and after Libya said it may cut oil production.
The Dow dropped 358.41 points, more than 3 percent, to close at 11,453.42 -- its lowest finish since Sept. 11, 2006. The blue-chip index is now 19 percent below its record close last October of 14,164.53.
A stream of bad news drove home to investors how much U.S. companies still stand to be hurt by the prolonged housing slump, the nearly year-old credit crisis and the soaring price of oil.
Negative analyst comments on General Motors Corp. drove shares of the largest U.S. automaker to their lowest level in more than 30 years. Citigroup Inc. stock fell sharply after an analyst give it a "sell" rating and warned investors to expect less from the brokerage sector in an uneasy economy. Disappointing forecasts from technology bellwethers Oracle Corp. and BlackBerry maker Research In Motion Ltd. further soured investors' moods and made the tech sector one of the steepest decliners.
The news sent broader stock indicators sharply lower as well. The Standard & Poor's 500 dropped 38.82, about 3 percent, to 1,283.15, and the Nasdaq composite slid 79.89, or 3.3 percent, to 2,321.37.
Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 1.54 billion shares.
The Dow and the S&P, which is off 18 percent from its highs of last fall, are close to the prolonged 20 percent decline that traditionally indicates a bear market. Many analysts would argue Wall Street has had a bear market mentality for months.
The unnerving forecast about oil prices raised the specter of higher inflation and more damage to the economy.
OPEC President Chakib Khelil was quoted as telling a French television station that oil could rise to between $150 and $170 per barrel this summer before pulling back later in the year.
That and a falling dollar helped send light, sweet crude as high as $140.39 and to a record settlement of $139.64 on the New York Mercantile Exchange.
All the bad news overshadowed a report by the National Association of Realtors that sales of existing homes edged up in May for only the second time in the past 10 months.
It also wiped out any positive impact from the Federal Reserve's widely expected decision Wednesday to leave interest rates unchanged.