Updated from 3:35 p.m. ESTThe major indices steep losses continued into the final hour of trading Thursday, erasing a modest midweek rally, amid concern for automaker General Motors ( GM), caution on U.S. banks, and mixed economic news. The Dow Jones Industrial Average fell 280.52 points, or 4.08%, to 6595.32, and the S&P 500 gave up 30.31 points, or 4.3%, to 682.56. The Nasdaq declined 54.15 points, or 4%, to 1299.59, below its November 20 closing low of 1,316.12, and just above its November 21 intraday low of 1,295.48. Alcoa ( AA), down 16%, and General Motors, down 17%, led the decliners on the Dow. The struggling U.S. automaker said in a 10-K filing that auditors have raised "substantial doubt" about its ability to continue as a going concern. Financials took their own beating after Moody's Investors Service said it might downgrade its ratings of Wells Fargo ( WFC) and Bank of America ( BAC) out of caution for potential loan losses. The ratings company expressed concern about JPMorgan as well. Bank of America, Citigroup ( C) and JPMorgan ( JPM) were all more than 10% lower, with Citi at times dipping below $1 a share. "It's too soon to talk about how we'll turn around, people are talking about how to protect themselves in this environment," says Michael Pento, chief economist for Delta Global Advisors. "I don't think market is at all enthused with the various stimulus packages that are out there -- or with the amount of debt that we're loading on future generations," says Pento. "It wants long-term, strong solutions for the economy, country, and currency." Chinese Premier Wen Jiabao did not unveil new stimulus on Thursday, despite previous market-moving reports that he would, but other efforts to deal with the economic downturn overseas were announced. Namely, the European Central Bank slashed its main interest rate by a half percentage point to 1.5%, a new record low.
And the Bank of England cut official interest rates by half a percentage point to 0.5% and said it will create new money to buy $106 billion of assets off troubled banks, a figure that was less than analysts expected, according to an Associated Press report. The United States Federal Reserve has already cut its key interest rate to a record low range, and Treasury Secretary Timothy Geithner has disclosed some parts of a plan to buy additional, toxic assets from U.S. banks to help their balance sheets and encourage lending. The House Budget Committee held a hearing with Geithner Thursday morning on the Obama Administration's fiscal 2010 budget. More jobs data came in ahead of Friday's unemployment figures. Initial jobless claims came in at 639,000 for the week ended Feb. 28, a less severe figure than economists expected and down from 670,000 the week prior. Meanwhile, unit labor costs rose to 5.7% from 1.8% for the fourth quarter, far surpassing expectations for a 3.8% increase. Business and nonfarm productivity slackened by 0.4% from the third quarter and was up 2.2% since 2007. Quarterly productivity in the business sector was affected by an 8.4% decrease in output, the largest since 1982, and an 8% decrease in hours worked, the largest since 1975. Later in the morning, the Commerce Department said factory orders declined less severely than expected, falling 1.9% in January after a 4.9% decline a month prior. In corporate news, Wal-Mart ( WMT) said its same-store sales in February
rose 5.1%, excluding fuel. Total net sales in the month rose 2.8% to $30.02 billion, outpacing the expectations of analysts.
The No.1 retailer in the world offers some relief to investors who are growing tired of companies decreasing or eliminating dividends altogether. Wal-Mart increased its annual dividend by 15%. Checking in on tech, Google ( GOOG) and Yahoo ( YHOO) were both lower, by 4% and 3%, Thursday. Thomas Weisel Partners cut its EPS ratings for the internet stocks late Wednesday, noting the continued weakening of the online ad environment and currency factors. In commodities, oil fell $1.77 to settle at $43.61 a barrel, while gold rose $18.50 to 916.90. Longer-dated Treasuries were rising. The 10-year note was adding 1-7.5/32 to yield 2.9%, and the 30-year was adding 2-26/32, yielding 3.6%. The dollar was recently weaker against the yen and stronger against the pound and euro. Stocks overseas were largely lower, but there were exceptions. The FTSE in London and the DAX in Frankfurt lost 3.2% and 5%, respectively. In Asia, Hong Kong's Hang Seng ended its session slightly lower, but Japan's Nikkei closed nearly 2% in positive territory.