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NEW YORK: Wall Street shares tumbled on Thursday as panicked investors made a frenzied rush out of stocks and into bonds in the face of more weak data and a breakdown in efforts for a bailout for automakers.
The main broad-market indicator sank to an 11-1/2-year low as investors ran for cover to the bond market, sending yields to all-time lows.
The Dow Jones Industrial Average sank to a fresh five-and-a-half year low, losing 444.99 points (5.56 percent) to end at 7,552.29 a day after a 427-point slide.
The Nasdaq lost 70.30 points (5.07 percent) to 1,316.12, its lowest close since 2003. The broad Standard & Poor's 500 plummeted 54.14 points (6.71 percent) to 752.44, the lowest finish since April 1997.
Elizabeth Harrow at Schaeffer's Investment Research said the market was pounded by "a seemingly endless barrage of dismal economic news."
The market wobbled most of the day and a sell-off accelerated as Democrats in Congress put off a vote on a bailout for crisis-hit "Big Three" automakers until at least December, and told industry chiefs to come up with a new rescue pitch.
Senate Majority leader Harry Reid said it was a "sad reality" that despite a bipartisan deal by senators from states which have millions of jobs depending on the industry, that there was not yet sufficient support for a bailout.
The news dimmed prospects for a key sector with the overall economy facing dire problems and unemployment rising.
"Sentiment on Wall Street took another severe blow with a late-day drop amid exacerbated economic woes and uncertainty toward the health of the US auto industry," said analysts at Charles Schwab & Co.
The latest economic news remained grim as the US Labour Department said new claims for unemployment benefits in the past week jumped to a 16-year high of 542,000.
"This is a horribly weak report on the labour market," said John Ryding at RDQ Economics.
The Conference Board meanwhile reported that its forward-looking index of leading economic indicators declined 0.8 percent in October.
"The economy is contracting, and the pace of contraction may intensify over the next few months," said Ken Goldstein, economist at the business research firm.
The market action came amid a global rout that saw a slide of 6.89 percent in Tokyo and hefty declines in Europe.
"There is no way to put lipstick on this pig," said Yves Smith, analyst at the financial website Naked Capitalism.
The panic pushed investors into bonds, breaking records for that market.
The yield on four-week Treasury bills fell to 0.045 percent and the three-month bill was yielding just 0.03 percent, as investors rushed for safety.
The 10-year Treasury bond yielded 3.022 percent, the lowest on record, after 3.391 percent on Wednesday. The 30-year bond yield declined to 3.502 percent, the lowest since records were kept by the Federal Reserve in 1977, against 3.972 percent.
Bond yields and prices move in opposite directions.
Ian Shepherdson, economist at High Frequency Economics, said the fear of deflation and worries about stocks could send bond yields even lower.
"This is all very exciting for bond investors but it also has macroeconomic implications," he said.
"Mortgage rates will drop over the next few weeks, though that alone won't revive activity as long as people are too scared to venture into the market."
In the troubled finance sector, Citigroup slid 26 percent to 4.71 dollars after a 23 percent plunge Wednesday, failing to get traction from news that Saudi Arabian Prince Alwaleed bin Talal would boost his stake in the banking group to five percent.
Bank of America dropped 13.9 percent to 11.25 dollars and JPMorgan Chase sank 17.9 percent to 23.38.
General Motors hit a 70-year low before rebounding 3.2 percent to 2.88 dollars, while Ford advanced 10.3 percent to 1.39 dollars, as investors speculated that a bailout plan may eventually emerge. - AFP/de
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