NEW YORK (AP) — Stocks plunged again Thursday as global economic fears reached a new fever pitch, slicing more than 200 points off the Dow industrials for a second straight day and pushing Wall Street back toward the summer’s lows.
The Dow Jones industrial average fell as much as 260 points before finishing with a loss of 210.09 at 7,632.53, a three-week low.
Broader stock indicators also tumbled as investors dumped stocks in finance and technology, the two sectors that have been singled out just about every time worries about foreign economic turmoil flared up over the past year.
A 237-point slide on Wednesday left the Dow with a 12.4 percent loss for the third quarter, the worst quarterly performance in eight years.
The two-session downturn has been fueled by worries that Tuesday’s interest rate cut by the Federal Reserve wasn’t big enough to counter the economic strain of the financial crisis crippling Asia and Russia and threatening Latin America.
Adding to the negative sentiment were some discouraging reports from the International Monetary Fund and Japan’s central bank, as well as worries that last week’s near-collapse of a major hedge fund, Long-Term Capital Management, might be the first of many bullets that the world’s shaky financial system may have to dodge.
“There’s a lot of fear out there without a question,” said John Lynch, director of investment strategy at Interstate/Johnson Lane in Charlotte, N.C., noting that the disappointment with the Fed has overshadowed a drop in long-term lending rates to historic lows in the bond market.
After two days of panicky selling “on the cusp of what should be good news, I’m wondering if investors are convinced there will be a recession,” said Lynch.
Confidence among small- and medium-sized businesses plunged to its worst level since the Bank of Japan began doing quarterly surveys in 1967. Business sentiment among major manufacturers fell to its lowest level in three years.