By Kate Gibson
U.S. stocks caved on Thursday, with the Dow industrials making a
comeback of sorts from a drop of nearly 1,000 points, as Europe's
financial troubles took hold on Wall Street.
At its height, the major stock indexes were all down 8%, with
the Dow Jones Industrial Average (DJI) diving almost 1,000 points
before halting its decline.
Yields on 10-year treasury notes dropped the most since
September 2008 and the euro fell to a new 14-month low, below
$1.26.
"The markets have an eerie feeling similar to the timeframe when
Lehman went down," said Andrew Brenner, head of emerging markets at
Guggenheim Securities.
"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.
The major U.S. stock indexes gave way shortly after 2 p.m.
Eastern, with the Dow Jones Industrial Average (DJI) lately off
366.69 points, or 3.4%, to 10,501.43 with all 30 components on the
decline, led by Bank of America Corp. (BAC), off 6.9%, and
Caterpillar Inc. (CAT), off 4.2%.
The S&P 500 Index (SPX) dropped 41.33 points, or 3.5%, to
1,125.07, with financials and utilities down the most among its 10
industry groups.
The Nasdaq Composite Index (RIXF) shed 77.93 points, or 3.2%, to
2,324.36.
More than 10 stocks were falling for every one on the rise on
the New York Stock Exchange, where 1.7 billion shares had traded as
of 3.10 p.m. Eastern. Composite volume topped 8.1 billion.
Exposed
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. .