July 3, 2008 in Business

Markets’ pullback continues

Associated Press The Spokesman-Review
 

NEW YORK – Wall Street resumed its sell-off Wednesday after oil hit a new record and a bearish analyst report renewed concerns that General Motors Corp. could run out of cash.

The stock market’s pullback, which accelerated in the final hours of the week’s last full trading session, left the Dow Jones industrial average officially in bear market territory, with the blue chips having fallen more than 20 percent from their October highs.

Oil surged to new records above $144 a barrel as the government reported a bigger-than-expected drop in U.S. supplies and as investors worried about tensions in the Middle East.

Fears that GM could go so far as to declare bankruptcy only added to investors’ unease. The stock closed below the $10 mark for the first time since September 1954 when Dwight Eisenhower was president. Investors shrugged off better-than-expected sales figures from June and fretted about the company’s cash needs.

The Dow fell 166.75, or 1.46 percent, to 11,215.51, the lowest close since August 2006. It now stands 20.82 percent below its Oct. 9, 2007, record of 14,164.53. The last bear market ended in October 2002.

Broader stock indicators also posted big losses after showing gains for much of the morning. The Standard & Poor’s 500 index fell 23.39, or 1.82 percent, to 1,261.52, while the technology-laden Nasdaq composite index fell 53.51, or 2.32 percent, to 2,251.46.

Gasoline prices hit a fresh high ahead of the holiday weekend, increasing half a penny to a new national record of $4.092 a gallon on average, according to AAA, the Oil Price Information Service and Wright Express.

The stock market today will close three hours early, at 1 p.m. EDT, but the session could bring added insights into the well-being of consumers and the overall economy. The government’s June employment report is due and is expected to show a slight improvement in the jobless rate.

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