Wednesday, July 2, 2008

Dow Enters Bear Market! Its Official

U.S. Stocks Slump as Oil Surges; Dow Average Enters Bear Market
By Michael Patterson
July 2 (Bloomberg) -- U.S. stocks tumbled, sending the Dow Jones Industrial Average into a bear market, after oil rose to a record and steelmakers and coal producers tumbled on concern the economic slump will worsen.

The Standard & Poor's 500 Index slid to its lowest since July 2006 as crude climbed above $143 a barrel, dimming the outlook for corporate profits. General Motors Corp., the biggest U.S. automaker, plunged to a 54-year low on Merrill Lynch & Co.'s warning that ``bankruptcy is not impossible.'' Nucor Corp. led the biggest tumble in steel shares since 2002 as concern grew that the auto slump will cut demand and the government said metals orders declined. Peabody Energy Co., the biggest U.S. coal producer, tumbled as European prices fell the most since 2005.

``Investor sentiment is clearly miserable right now,'' said Wayne Wilbanks, who oversees about $1.2 billion as chief investment officer of Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia. ``A lot of this misery among investors is starting to get priced into the indices.''
The Dow lost 166.75 points, or 1.5 percent, to 11,215.51. The S&P 500 plunged 23.38, or 1.8 percent, to 1,261.53, extending its 2008 loss to 14 percent. The Nasdaq Composite Index slid 53.51, or 2.3 percent, to 2,251.46. More than five stocks fell for each that rose on the New York Stock Exchange.

Technology and consumer shares also helped fuel the market's retreat after a private report showed a bigger-than-forecast drop in jobs last month. The 30-stock Dow average extended its retreat from the October record to more than the 20 percent, the first time since 2002 the gauge has closed below the threshold that signals a so-called bear market.

To contact the reporter on this story: Michael Patterson in New York at Last Updated: July 2, 2008 16:09 EDT

Its official. The recession is here.