Wall Street extended its losses Thursday, as a negative ratings outlook on financial and industrial powerhouse General Electric Co. shook an already fragile investor psyche and sent stocks tumbling.
After moving within a narrow trading range for much of the session, the Dow Jones industrial average dropped about 220 points. The broader Standard & Poor’s 500 index lost more than 2%.
The Dow fell 219.35, or 2.49%, to 8,604.99. The Standard & Poor’s 500 index fell 19.14, or 2.12%, to 885.28, while the Nasdaq composite index fell 26.94, or 1.71, to 1,552.37.
The Russell 2000 index of smaller companies fell 7.42, or 1.52%, to 479.17.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 5.46 billion shares, up from 5.18 billion shares on Wednesday.
Since the S&P 500 and the Dow hit multiyear lows on Nov. 20, the Dow is still up 13.9%, while the S&P 500 is up 17.7%.
Wall Street’s sharp decline late Thursday overshadowed some of investors’ earlier enthusiasm over a potential economic stimulus package. President-elect Barack Obama’s aides are working on assembling a two-year plan that could cost US$850 billion and include new jobs, middle-class tax relief and expanded aid for the poor and the unemployed.
The Labor Department reported that initial jobless claims fell by more than economists anticipated to 554,000 last week. The claims remain near last week’s 26-year high, and the four-week moving average for claims is up, but investors had been bracing for a gloomier reading.
The January contract for light, sweet crude, which closes on Friday, fell 9%, or US$3.84, to settle at US$36.22 a barrel on the New York Mercantile Exchange after dropping as low as US$35.98, levels not seen since June 2004.
In Europe, Britain’s FTSE 100 rose 0.15%, Germany’s DAX index rose 1.02%, and France’s CAC-40 fell 0.24%.