Dow has worst day in 3 years
finance.myway.com
NEW YORK (Reuters) - U.S. stocks plunged on Wednesday, wiping out $64 billion in market value from the 30 companies that make up the Dow and giving the blue-chip average its biggest one-day drop in three years, as investors bet the Federal Reserve will need to keep raising interest rates to fight inflation.
Investors particularly hammered shares of banks, industrial conglomerates and other rate-sensitive companies. An index of bank stocks <.BKX> slid 1.8 percent, while shares of blue-chip Citigroup Inc. (C) dropped 1.4 percent.
The blue-chip Dow dropped more than 200 points, the biggest slide since March 2003. The market's rout left the Nasdaq mired in its longest losing streak in five years.
Stocks fell after economic data showed the pace of inflation accelerated in April, boosting speculation that the Fed will raise rates longer than Wall Street had expected.
"Inflation, which is the principal focus of the Fed, is higher than Chairman Bernanke will feel comfortable with," said Hugh Johnson, chief investment officer at Johnson Illington Advisors. "It adds to the belief the Fed may raise rates further, and that is a problem for both the bond market and the stock market."
The Dow Jones industrial average <.DJI> slid 214.28 points, or 1.88 percent, to end at 11,205.61. The Standard & Poor's 500 Index <.SPX> fell 21.76 points, or 1.68 percent, to finish at 1,270.32. The Nasdaq Composite Index <.IXIC> tumbled 33.33 points, or 1.50 percent, to close at 2,195.80.
The Nasdaq is now down 0.4 percent for the year.
The Dow has lost more than 500 points this week, paring its advance for 2006 to 4.6 percent. The S&P 500 is up 1.8 percent this year. |
