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Dow ends at lowest in more than 6 years


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POSTED: Friday, February 20, 2009

NEW YORK » An important psychological barrier gave way on Wall Street yesterday as the Dow Jones industrials fell to their lowest level in more than six years.

The Dow broke through a bottom reached in November, pulled down by sharp declines in key financial shares. It was the lowest ending for the Dow since Oct. 9, 2002, when the last bear market bottomed out.

The move below that level dashed hopes that the doldrums of November would mark the ending point of a long slump in the market, which is now nearly halfway below the peak levels reached in October 2007.

“;It is definitely, definitely a blow to psychology,”; said Quincy Krosby, chief investment strategist at The Hartford. “;There is more pessimism in the market as to when the economy is going to pick up steam.”;

The Dow had been threatening to break through the November bottom since Tuesday, when the index tumbled 300 points on worries about the economy and the stability of banks in Eastern Europe. Stocks had barely finished above the November low on Tuesday and Wednesday.

Yesterday, persistent worries about financial and technology stocks weighed on the market, with steep drop-offs in financial bellwethers like Citigroup and Bank of America leading the way downward. Both stocks ended down about 14 percent.

The Dow lost 89.68, or 1.2 percent, to end at 7,465.95.

Broader indexes also fell. The Standard & Poor's 500 index ended down 9.48, or 1.20 percent, to 778.94, but finished above its Nov. 20 low of 752.44.

The technology-heavy Nasdaq composite index suffered the biggest hit yesterday after Hewlett Packard Co. tumbled 7.9 percent after posting worrisome results. The Nasdaq fell 25.15, or 1.71 percent, to 1,442.82.

The Russell 2000 index of smaller companies fell 6.47, or 1.5 percent, to 416.71.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.49 billion shares.

Hewlett-Packard gave up nearly 8 percent after the computer and printer company turned in disappointing fourth- quarter sales, hurt by tightening spending at many businesses.

Even the bright spots weren't enough to lift the market. Sprint Nextel Corp., the nation's third-largest wireless carrier, rose 20 percent after its fourth-quarter results came in better than forecast. And Whole Foods Market Inc. jumped 37 percent yesterday after earnings from the natural and organic grocer topped expectations.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, rose to 2.86 percent from 2.75 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.31 percent from 0.30 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose $2.77 to settle at $40.18 per barrel on the New York Mercantile Exchange.

An index of leading economic indicators logged a surprise increase in January, the second straight monthly gain, but the Philadelphia Federal Reserve said conditions in the region's manufacturing sector weakened in February. Also, a reading on wholesale prices, the Producer Price Index, jumped more than expected in January, the first increase in six months.

H-P fell $2.69, or 7.9 percent, to $31.39 after its fourth-quarter sales fell short of Wall Street's expectations and it reduced its forecast.

Citigroup fell 40 cents, or 13.8 percent, to $2.51, while Bank of America fell 64 cents, or 14 percent, to $3.93.

Sprint rose 54 cents, or 19.9 percent, to $3.25, while Whole Foods rose $3.46, or 37.2 percent, to $12.75.