Stocks Plunge; Investors Flee to Treasurys

Stocks plummeted again yesterday, hitting a five-year low, and crude oil prices skidded to their lowest level in more than three years.

Traders headed to the exits yesterday and into the safety of government bonds as further signs of economic weakness emerged. Stocks took another late-afternoon swoon on concerns that the U.S. auto sector could collapse without a federal bailout and that financial firms are only beginning to account for their losses from the financial crisis.

The Dow Jones industrial average fell 5.56 percent, or 444.99 points, to finish the day at 7552.29, its lowest close since March 2003. It has fallen 19 percent already this month, putting it on track to overtake October as the worst month for trading in the past two decades.

The Standard & Poor's 500-stock index tumbled 6.71 percent, or 54.14 points, to 752.44, its lowest level since April 1997. The tech-heavy Nasdaq composite index fell 5.07 percent, or 70.30 points, to close at 1316.12.

Meanwhile, the yield on three-month government bonds fell to 0.01 percent from 0.06 percent, a sign that investors are willing to earn less from their investment.

Light sweet crude oil was down 7 percent, to $49.62 a barrel, the first time it has closed below $50 since 2005. Oil prices have been depressed by expectations that a global recession will further dampen demand. Analysts say prices could reach $35 to $45 a barrel by the end of the year.

Auto stocks swung from positive to negative territory as investors gauged progress on emergency legislation for the industry. The program remained in limbo yesterday.

General Motors, which has said it could run out of money next year, fell more than 30 percent before regaining ground late in the day and closing up 3 percent, at $2.88 a share. Ford was up 10 percent, to $1.39 a share.

Citigroup, battered by investors all week, continued its slide. The company's stock fell 26 percent, to $4.71, despite a sign of support from Saudi Prince Alwaleed bin Talal, who said he would increase his stake in the firm.

The entire financial sector was under pressure, including J.P. Morgan Chase, which fell 17.9 percent, to $23.38. The company will announce plans to lay off about 10 percent of its investment-banking staff -- 3,000 employees -- according to a source familiar with the situation who spoke on condition of anonymity because he was not authorized to speak on the subject.

Meanwhile, the number of workers filing new claims for jobless benefits surged to a seasonally adjusted 542,000 last week, according to Labor Department data. That is the highest level in 16 years and surpassed analysts' expectations.