By Kate Gibson
U.S. stocks caved on Thursday, with the Dow industrials down
more than 500 points and poised for their second triple-digit drop
in three days, as investors pondered the implications of Europe's
financial troubles on Wall Street.
"You can go back to Goldman Sachs Friday when the market sold
off. Since then the market has been prone to headline risk and
looking for a reason to sell off," said Jay Suskind, senior vice
president at Duncan-Williams.
"Is the market now seeing Greece and Europe as the canary in the
coal mine for us? We all know we have budget and deficit issues,"
Suskind said.
After brief bursts into positive territory, the major U.S. stock
indexes gave way, as the euro fell to a 14-month low against the
dollar and crude-oil futures traveled to two-month lows under $80 a
barrel.
The Dow Jones Industrial Average (DJI) was off more than 500
points, or 5.3%, to 10,353.0 with all 30 components on the decline,
led by Bank of America Corp. (BAC), off 7.5%, and Caterpillar Inc.
(CAT), off 7.1%.
The S&P 500 Index (SPX) dropped 65.50 points, or 5.5%, to
1,097.43, with financials and utilities down the most among its 10
industry groups.
The Nasdaq Composite Index (RIXF) shed 94.45 points, or 4%, to
2,307.84.
Nearly 10 stocks were falling for every one on the rise on the
New York Stock Exchange, where 647 million shares had traded as of
2:35 p.m. Eastern. Composite volume neared 6.5 billion.
"While the situation in Europe will potentially have only a
small impact on the U.S. recovery, it remains an important export
and import market for many countries and the euro is second only to
the dollar as a universal transaction currency," Fred Dickson,
chief market strategist at Davidson Cos., wrote in a note.
Exposed
"U.S. companies with substantial European exposure may get hurt,
as products with a dollar cost basis suddenly have become more
expensive in Europe," Dickson added.
As Greece looked to a $144 billion rescue from the International
Monetary Fund 15 other nations that use the euro to help cover its
debt, some questioned if some of the nations helping foot the bill
- namely Portugal and Spain - would eventually need to be bailed
out as well.
U.S. economic data was mixed, while retailers reported April
sales slowed from March's robust gains, with a majority of those
reporting missing expectations.
Gap Inc. (GPS) was among the underperformers, its shares down
6.6% after the apparel chain reported same-store sales dropped
3%.
Abercrombie & Fitch Co. (ANF) shares declined 11% after the
teen-clothing seller after its same-store sales fell 7%.
Ahead of Friday's jobs report for April, the Labor Department
reported initial claims for unemployment benefits fell by 7,000
last week to 444,000.
The government data is expected to show the U.S. economy added
between 189,000 to 200,000 jobs last month, while the rate of
unemployment held at 9.7%.
Separately, the Labor Department on Thursday said U.S.
productivity climbed 3.6% in the first quarter.
In Washington, Treasury Secretary Timothy Geithner and former
Treasury Secretary Henry Paulson pitched financial reform, telling
a fact-finding panel the economic crisis came in large part because
regulators didn't have the power to limit risk. .