Stocks Plunge Near November Lows
Wednesday, February 18, 2009
NEW YORK, Feb. 17 -- Stocks tumbled Tuesday as investors around the world grew more doubtful that governments can quickly turn around the weakening global economy.
The Dow Jones industrial average closed down 297.81 points, or 3.8 percent, at 7552.60 -- just 0.31 above its post-meltdown Nov. 20 close of 7552.29, which was its lowest close in 5 1/2 years. Broader stock indicators also plummeted. The Standard & Poor's 500-stock index, which fell 37.67, or 4.6 percent, to 789.17, came with 48 points of its 11-year intraday low of 741.02, reached Nov. 21. The Nasdaq composite index fell 63.70, or 4.2 percent, to close at 1470.66.
The problems that slammed stocks last year -- ailing banks, foundering automakers, tumbling home prices and cash-strapped consumers -- haven't let up. Instead, the issues have festered, and are threatening to push U.S. stocks back to levels not seen since the late 1990s.
"You're looking at a crescendo, if you will, of uncertainty," said Richard E. Cripps, chief market strategist for Stifel Nicolaus. "We're still in that period where more information needs to come out."
Only a little more than 200 stocks rose on the New York Stock Exchange, while nearly 3,000 fell. Investors fled from stocks and flocked instead to Treasurys, sending government debt yields lower.
The drop on Wall Street followed sharp pullbacks on overseas exchanges. In Asia, Japan's Nikkei stock average fell 1.35 percent, and Hong Kong's Hang Seng index fell 3.79 percent. In Europe, Britain's FTSE 100 fell 2.43 percent, Germany's DAX index fell 3.44 percent, and France's CAC-40 fell 2.94 percent. In Latin America, Brazil's Ibovespa index plunged 4.77 percent, and Mexico's IPC index fell 3.42 percent.
Investors are particularly concerned that General Motors and Chrysler might not be able to repay billions of dollars in loans and return to profitability. GM shares dropped 32 cents, or 12.8 percent, to $2.18. Chrysler's shares are not publicly traded. The two companies issued their long-awaited restructuring plans after the close of financial markets.
Bank stocks were the biggest losers of the day, but nearly all sectors performed badly on Tuesday -- including technology, energy and airlines. Insurance companies were hit hard, too. Allstate fell $2.09, or 9.8 percent, to $19.14, and MetLife fell $2.71, or 10.1 percent, to $24.09.
The dollar rose against other major currencies. Gold prices also rose.
Oil prices fell $2.58, to $34.93 per barrel, on the New York Mercantile Exchange.