Dow tumbles over 300 points
Stocks continue to selloff as credit market fears send financials sharply lower; oil, earnings remain in focus.
NEW YORK (CNNMoney.com) -- Renewed credit market fears once again sent stocks reeling, with the Dow industrials falling over 300 points Wednesday, while investors nervously eyed oil prices as they hovered near $100 a barrel.
The Dow Jones Industrial average (Charts) had fallen by as much as 315 points and with less than a half hour remaining in the session the 30-stock index was 305 points, or about 2.2 percent lower.
Stocks retreated at the start of the session on dismal earnings news from General Motors, before the battered financials once again became the trading focus.
Banks and brokerage stocks tumbled following a handful of warnings issued Wednesday that more writedowns were likely before the year's end.
Citigroup (Charts, Fortune 500) continued its recent decline, falling 3 percent. Morgan Stanley (Charts, Fortune 500) stock lost over 5 percent while Goldman Sachs (Charts, Fortune 500) fell over 3 percent and Lehman Brothers (Charts, Fortune 500) was over 4 percent lower. The AMEX Securities Broker/Dealer index (Charts) was 3.4 percent lower.
"It just seems like we get these repeats every few days," said Bill Stone, chief investment strategist at PNC Wealth Management.
In related news, Washington Mutual (Charts, Fortune 500) shares tumbled over 16 percent after the company suggested that more weakness lay ahead in 2008. The company said that losses on loan defaults will continue to decline at the same rate in the first quarter of 2008 as in the current quarter.
And shares of Freddie Mac (Charts, Fortune 500) and Fannie Mae (Charts) fell after New York Attorney General Andrew Cuomo issued a subpoena to the government-related lenders as part of an investigation into loans the pair purchased from banks such as Washington Mutual.
Just last week, the Dow industrials plunged 362 points after an analyst warned that Citigroup may have to cut its dividend in order to raise $30 billion in capital, which sparked fears about weakness in the broader financial sector.
Also in focus for Wall Street were oil prices, which soared to an all-time trading high of $98.62 a barrel. But a run-up towards $100 a barrel stalled after the weekly U.S. inventory report revealed that supplies fell less than expected.
Light, sweet crude for December gained 2 cents to $96.39 a barrel on the New York Mercantile Exchange.
Gold prices also continued to head higher, nearing the all-time high of $850 an ounce last reached in January 1980. COMEX gold for December gained $10.10 to $833.50 an ounce.
Before the opening bell, General Motors reported a a bigger-than-expected loss, which included a $39 billion charge related to the writedown of tax credits for losses over the past three years, sending GM (Charts, Fortune 500) shares down 5 percent.
Time Warner (Charts, Fortune 500), the world's largest media company, reported improved revenue that beat forecasts as it reaffirmed its 2007 outlook. It also announced that its America Online unit was making an acquisition. Time Warner is the parent of CNNMoney.com.
And GM rival Toyota Motor (Charts), which had been hit by sluggish sales in its two most important markets, Japan and the United States, nevertheless reported an 11 percent increase in profits and it raised its earnings forecast for the full year.
Companies scheduled to report quarterly earnings after the markets close Wednesday include the world's largest insurer, American International Group Inc. (Charts, Fortune 500), and computer network giant Cisco Systems (Charts, Fortune 500).
Market breadth was negative. Losers topped winners by 7 to 1 on the New York Stock Exchange as 1.21 billion shares traded hands. Decliners beat advancers by nearly 4 to 1 on volume of 1.93 billion shares.
On the economic front, the Labor Department reported that worker productivity grew at its fastest rate in four years in the July-September quarter. At the same time, wage pressures and unit labor costs fell.