Wall Street hit levels not seen since 2003, with the Dow Jones industrial average plunging below the 8,000 mark amid a dour economic outlook from the Federal Reserve and worries over the fate of Detroit's three automakers.
A cascade of selling occurred in the final minutes of the session yesterday as investors yanked money out of the market. For many, the real fear is that the recession might be even more protracted if Capitol Hill is unable to bail out the troubled auto industry.
Investors also scoured economic data that included minutes from the last meeting of the Federal Reserve in which policy- makers lowered projections for economic activity this year and next. Economic worries caused across-the-board selling, with financial stocks particularly hard hit.
The S&P 500, widely considered the broadest snapshot of corporate America, slipped 52.54 points, or 6.12 per cent, to 806.58; and the Dow gave up 427.47 points, or 5.07 percent, to 7,997.28. Both closed at their lowest levels since March 2003, and are rapidly approaching the lows of the 2000 to 2002 bear market.
The financial crisis has already wiped out $6.69trillion of value from the S&P 500 since its October 2007 high, and many fear more is to come. Stocks have traded with high volatility in the past few months, with the major indexes soaring only to plunge an hour later as the market searches for a bottom.
"I don't know what the catalyst is going to be where we turn the corner and people start buying stocks wholeheartedly again," said Jon Biele, head of capital markets at Cowen & Co. "People got out of the way. The financial situation hasn't changed." The selling on the New York Stock Exchange was staggering only 158 companies that trade there finished the day positive while 2,943 declined.
The Indian ADRs, too, tumbled heavily. Tata Communications slumped 15% to $16.07. ICICI Bank tumbled 13.6% to $12.55, and HDFC Bank plunged over 10% to $50.09. Infosys, Genpact, Sterlite, Satyam, Wipro, Patni Computers, MTNL, Dr.Reddy's and Tata Motors declined 4-7% each.
