Associated Press
Thursday, July 3, 2008

NEW YORK, July 2 -- Wall Street resumed its sell-off Wednesday after oil hit a new record and a bearish analyst report renewed concerns that General Motors could run out of cash.

The Dow Jones industrial average fell 166.75, or 1.46 percent, to 11,215.51, the lowest close since August 2006. Broader stock indicators also posted losses after showing gains for much of the morning. The Standard & Poor's 500-stock index fell 23.39, or 1.82 percent, to 1261.52, while the technology-laden Nasdaq composite index fell 53.51, or 2.32 percent, to 2251.46.

The stock market's pullback, which accelerated in the final hours of the week's last full trading session, left the Dow officially in bear market territory. The blue chips are now 20.82 percent below their Oct. 9, 2007, record of 14,164.53. The last bear market ended in October 2002. The S&P is just shy of the 20 percent pullback that signals a bear market. While the Nasdaq is also in bear territory, it hit that mark in March, moved higher and has now returned to a bear level.

Oil surged to a new record above $144 a barrel as the government reported a bigger-than-expected drop in U.S. supplies and as investors worried about tensions in the Middle East.

Fears that GM could declare bankruptcy added to unease. The stock closed below $10 as investors shrugged off better-than-expected June sales, fretting about the firm's cash needs.

The Commerce Department said Wednesday that factory orders rose 0.6 percent in May compared with a 1.3 percent gain in April.

Traders were cautious ahead of the long weekend. The stock market closes three hours early on Thursday before the Fourth of July holiday on Friday.

While Thursday's session is a shortened one, it could bring added insights into the well-being of consumers and the overall economy. The government's June employment report is due and is expected to show the sixth month of jobs losses but a slight improvement in the jobless rate.

GM fell $1.77, to $9.98.

Blockbuster jumped 14 cents, to $2.65, after withdrawing its proposal to buy Circuit City Stores.

Circuit City fell 23 cents, to $2.32.