U.S. Stock Drop Is Longest Losing Streak For Dow Since October
NEW YORK (MarketWatch) -- The stock market's ongoing slide on Thursday had the Dow Jones Industrial Average mired in its longest losing streak since early October in the wake of Lehman Brothers Holdings Inc. going belly up, marking the start of the ongoing crisis for financials.
"Today is another example of how the end-of-the-year enthusiasm has run into the cold hard reality of how bad the news is," said Art Hogan, chief market strategist at Jefferies & Co.
As has been the case in recent days, financials and energy shares fronted the declines, while defensive plays -- namely health care and consumer staples -- bled the least.
"We're not going anywhere until the financials get better," said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
On the Dow, Citigroup Inc. and Bank of America Corp. shed an astounding 20-plus percent of their market value within the first two hours of trade.
Later in the session, both had recovered some, with Citigroup down 10.6% and Bank of America off 14.2%.
Investors had blasted Bank of America on word the government is dipping into its $700 billion bailout war chest to help the firm digest its acquisition of Merrill Lynch & Co. while Citigroup shares were slammed ahead of the bank's fourth-quarter earnings report on Friday, with the firm expected to report a loss of as much as $10 billion.
On Thursday, a triple-digit slide had the Dow Jones Industrial Average briefly breaching the 8,000 level, sliding to an intraday low of 7,995.13.
At last check, the blue-chip index was off 79.01 points at 8,121.13, with seven of its 30 components edging higher.
Home Depot Inc. led the gains, recently up 3.3%.
The S&P 500 shed 8.18 points to 834.44, while the Nasdaq Composite rose 7 points to 1,496.83.
"The ongoing trouble in the financial industry seems to be the primary factor underlying the big spike in volatility over the past seven trading sessions," said Frederic Ruffy, options strategist, WhatsTrading.com.
The return of fear was reflected in the CBOE Volatility Index, which was back to levels last seen on Dec. 16. .
The Dow's triple-digit slide marks the longest losing streak since the eight-day drop that ended Oct. 10. That particular bout of declines ended with the Dow rallying more than 900 points on Monday, Oct. 13, on global government intervention to revive the banking sector.
Prior to the October's eight-day run of loses, the Dow's longest losing streak involved an eight-day drop that ended Sept. 21, 2001.
"The last two weeks of December and the first week of this year, there was a certain amount of enthusiasm based on three things: excitement about aggressive money policy, excitement about aggressive fiscal stimulus, and the inherent optimism that historically comes with the start of a new year. Unfortunately you have to juxtapose that against a much harsher reality when we look at the magnitude of issues we're facing," said Hogan.
By Kate Gibson