NEW YORK (AP) — Wall Street sank yesterday as oil's surge above $108 a barrel and more worrisome signs for the financial sector led investors to extend last week's losses. The Dow Jones Industrial Average fell more than 150 points, bringing its three-day loss to nearly 515, while broader indexes showed steeper percentage losses.
Wall Street had no bleak economic data to deal with yesterday but faced a steady drumbeat of negative news on companies exposed to mortgages.
Mortgage lenders dropped after Thornburg Mortgage was downgraded by Jefferies & Co., and Countrywide Financial was reported to be under investigation for securities fraud.
Then, Bear Stearns dropped as Moody's Investors Service downgraded a batch of Bear securities backed by Alt-A mortgages, which are home loans given to people lacking proof of income or with minor credit problems.
The slew of downbeat financial news overshadowed a strong February sales report from McDonald's Corp. and led restless investors to proceed cautiously ahead of big economic reports later in the week: Thursday's report on retail sales and Friday's report on consumer prices.
The Dow fell 153.54, or 1.29 percent, to finish near the lows of the session at 11,740.15. It was the lowest close for the Dow since October 2006.
Broader stock indicators also retreated. The Standard & Poor's 500 Index fell 20, or 1.55 percent, to 1,273.37, while the Nasdaq Composite Index fell 43.15, or 1.95 percent, to 2,169.34. The Russell 2000 Index of smaller companies fell 16.14, or 2.45 percent, to 643.97.
Gold fell, while the dollar traded mixed.
JPMorgan slashed its year-end target for the S&P 500 index and earnings for S&P 500 companies, after the its chief economist said he believes a recession began in January.
McDonald's, a Dow component, rose $1.53, or 2.9 percent, to $53.80.
Thornburg Mortgage sank $1.08, or 60 percent, to 71 cents, while Countrywide fell 71 cents, or 14 percent, to $4.36.
Bear Stearns fell $7.78, or 11.1 percent, to $62.30 on the Moody's move and also amid market rumors about a liquidity squeeze at the company. Bear Stearns said there was "absolutely no truth" to the rumors.