United Airlines gave Wall Street new worries today, enough of them to outweigh any reassurance investors might have gotten from the new economic team given them by President Bush.
Stocks fell for the sixth day in the past seven with the Nasdaq Stock Market composite index dropping close to 4 percent, its biggest decline since September, and the Dow Jones industrial average losing 2 percent, its worst loss in almost a month.
The Nasdaq composite closed off 55 points at 1,367.14. The Dow dropped 172 to 8,473.41. The Standard & Poor's 500 stock index fell 20 points to 892.
United's bankruptcy reinforced concerns about the health of the entire airline industry and sent out ripples that could rattle industries ranging from aircraft manufacturing to travel and lodging and eventually to all sorts of business that depend on consumer spending.
Retail stocks slumped, financial services stocks fell and technology stocks tanked. By the closing bell 26 of the 30 Dow industrial stocks were down along with 9 out of every 10 members of the S&P 500.
Wall Street's woes demonstrated why the Bush administration felt the need to bring in a new economic team to demonstrate concern for the economy, lead the fight to get a stimulus package through Congress and communicate the message that the economy is not being neglected because of foreign policy concerns.
On Friday, stocks recovered from early losses on news that the president had sacked Treasury Secretary Paul O'Neill and economic adviser Lawrence Lindsey.
But today, the markets returned to their retreat even though the replacements are both well-connected Wall Streeters. John Snow, nominated today to be treasury secretary is not only the chairman of CSX Corp., but also chairman of the influential Business Roundtable. Stephen Friedman, who is widely reported to be Bush's choice to replace Lindsey, comes from Goldman Sachs & Co., the prestigious firm that produced former Treasury Secretary Robert Rubin, Sen. John Corzine (D.-N.J.) and a host of former government officials.
The right connections and the promise of a stimulus package that could include as much as $300 billion in tax cuts, however, were not enough to turn around the market.
Nor is Wall Street expected to get any benefit from tomorrow's meeting of the Federal Reserve's Open Market Committee. The Fed has already done what it can to goose growth and concern about what more the White House can do is one of the reasons why investors are still cautious.