S& P 500 Logs Worst Week in 75 Years
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Stocks plunged, sending the Standard & Poor's 500-stock index to its worst week in 75 years on concern the credit crisis will spread from banks to consumer companies and energy producers, triggering a global recession.
Financial firms in the S&P 500 fell to an almost 12-year low, led by Morgan Stanley, on speculation that they're running short of money as lending markets freeze. General Motors and Ford slid more than 45 percent as S&P said the carmakers may be forced into bankruptcy. Exxon Mobil, the largest energy company, lost a fifth of its value as oil prices dropped below $78 for the first time in a year.
For the week, the S&P 500 dropped 200.01, or 18 percent, to 899.22, the lowest since April 2003. The Dow Jones industrial average lost 1874.19 points, or 18 percent, to 8451.19 for the biggest weekly slide in the history of the 30-stock average. The Nasdaq composite index fell 15.3 percent to 1649.51.
The MSCI World Index of 23 developed countries lost 20 percent, the most since records began in 1970.
"What we have is a slow-motion crash," said Robert Arnott, founder of Research Affiliates in Pasadena, Calif. "In the space of 10 days, we've had a 25 percent drop -- that's a crash. It's slow-motion compared with 1987 or 1929."
The S&P 500 has fallen 39 percent this year, led by financial companies as losses tied to the collapse of the subprime mortgage market topped $630 billion.
The benchmark is poised for its worst annual performance since 1937.
A gauge of banks and insurers in the S&P 500 fell 22 percent last week to the lowest since December 1996. Credit markets stayed frozen as the cost of borrowing in dollars in London rose to the highest this year, according to the British Bankers' Association.
Morgan Stanley plunged 60 percent as Moody's Investors Service said it may reduce the investment bank's credit rating on concern the financial crisis threatens earnings and investor confidence. Bank of America slid 39 percent. It cut its dividend in half and sold $10 billion in common stock at a discount. Citigroup fell 23 percent after Wells Fargo trumped its bid to buy Wachovia.
The Treasury will auction $25 billion of three-month bills and $27 billion of six-month bills on Tuesday. They yielded 0.46 percent and 0.97 percent, respectively, in when-issued trading. The Treasury will sell one-month bills Wednesday.
-- Bloomberg News
