Steep losses in financial stocks help drop market index to level not seen in six years
NEW YORK – Three months after it looked like the stock market had hit rock bottom, the Dow Jones industrial average slumped Thursday to a six-year low.
The Dow skidded 89.68 points, or 1.2 percent, to 7,465.95 – sagging below its 7,552.29 mark during November 2008’s heated market sell-off and raising worries that share prices overall are poised for another steep fall.
The world’s best-known market barometer has fallen 15 percent in the seven weeks since New Year’s Day 2009 and is at its lowest point since October 2002.
At a minimum, the drop indicates that a long-awaited market rebound will take longer to develop, and is a disappointment to individual investors who had hoped that the worst losses in their retirement and college-savings accounts were over.
“It doesn’t mean that we’re going to see a huge downward movement and fall to 6,000,” said Bob Sweet, managing editor of Dow Theory Forecasts newsletter in Hammond, Ind. “What it does mean is that the market has not, as many people had hoped, laid a bottom, and that we’re going to have to start over the process of looking for a recovery.”
The most immediate likelihood, experts said, is that the Dow would retest its October 2002 low of 7,286.27, to which it fell during the depth of the post-Internet-bubble bear market. That would mark an additional 2.4 percent drop from Thursday’s close.
The Dow’s woes also raised fear that the Standard & Poor’s 500 Index could be the next major index to plumb its November low – a more worrisome development because the fate of the broader S&P carries far more weight with Wall Street professionals.
The S&P 500 gave up 9.48 points, or 1.2 percent, to 778.94. It is 3.5 percent above its Nov. 20 low.
The Nasdaq composite index slumped 25.15 points, or 1.7 percent, to 1,442.82. It is 9.6 percent above its November trough.
“It’s really just a question of when the November lows are going to be violated,” said Louise Yamada, head of Louise Yamada Technical Research Advisors in New York. “It seems probable that they’re going to give way.”
The Dow was dragged down by sharp losses in several of its financial stocks, including new multiyear lows in Bank of America Corp. and Citigroup Inc., which each sank 14 percent.