By Kate Gibson
U.S. stocks ended with steep losses Thursday after an afternoon
meltdown had the Dow falling nearly 1,000 points - its biggest
intraday drop ever - before a comeback of sorts, as Europe's
troubles took hold on Wall Street and amid talk errant trades
exacerbated the swift selloff.
"We're not talking about a couple of companies going bust; we're
talking about countries," said Peter Boockvar, equity strategist at
Miller Tabak, of worries that Europe would not be able to contain
debt troubles prompting riots in Greece.
At the worst of the afternoon freefall, the major stock indexes
were all down 8%, with the Dow Jones Industrial Average (DJI)
diving 992.6 points before halting its decline, finishing at
10,520.32, off 347.8 points, or 3.2%.
"The panic in the middle of the day was market makers that just
disappeared, and every machine on Wall Street was trying to sell
into a market that didn't exist. That was a bizarre electronic
quant panic of people selling into a black hole," said Bookvar.
As equities fell the most in more than a year, 10-year treasury
notes rallied, with yields dropping the most since September 2008
and the euro falling to a new 14-month low against the U.S. dollar,
below $1.26. Credit-default swaps spreads jumped.
The finish marked the Dow's biggest point drop since Feb. 10,
2009 and largest percentage decline since April 20, 2009, according
to preliminary data from Dow Jones Indexes.
The S&P 500 Index (SPX) fell 37.72 points, or 3.2%, to
1,128.15, the worst day for the index since it fell more than 4% on
April 20, 2009, according to Standard & Poor's Howard
Silverblatt.
The Nasdaq Composite (RIXF) declined 82.65 points, or 3.4%, to
2,319.64.
Analysts compared the day's trade to the market's reaction to
low points in the 2008 financial crisis.
"The markets have an eerie feeling similar to the timeframe when
Lehman went down," said Andrew Brenner, head of emerging markets at
Guggenheim Securities.
More than 17 stocks fell for every one that gained on the New
York Stock Exchange, where nearly 2.6 billion shares traded and
composite volume topped 10.7 billion.
As analysts sifted through the details of the day's yo-yo
action, a brief plunge in Procter & Gamble Co. (PG) and other
shares, including S&P 500 index futures, came into focus.
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.
"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.
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
7.2% after the apparel chain reported same-store sales dropped
3%.
Abercrombie & Fitch Co. (ANF) shares declined 8.6% 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. .