U.S. Stocks Sharply Lower; Dow Industrials Fall To 2008 Lows
NEW YORK (MarketWatch) -- U.S. stocks fell sharply Thursday, with the Dow industrials skidding to their lowest level of the year, after Goldman Sachs Group Inc. downgraded U.S. brokers and advised selling shares of General Motors, and cautious outlooks from Research In Motion Ltd., Nike Inc. and Oracle Corp.
The Dow Jones Industrial Average tumbled 204.77 points, or 1.7%, to 11,607.06, after earlier hitting an intra-day low of 11,570.7, dipping below the intra-day low of 11,634.82 hit on Jan. 22.
General Motors Corp. weighed most heavily on the blue chips, down more than 10%, after Goldman Sachs told clients to unload their positions in the face of the deteriorating automotive climate. .
On the New York Mercantile Exchange, oil futures jumped $3.60, or 2.7%, to $138.15 a barrel, slightly off an earlier high of $138.90, while gold futures climbed $31.7 to $914 an ounce.
Of the Dow's 30 components, only Coca-Cola Co. was trading in positive turf, up 0.2%.
The S&P 500 fell 22.73 points, or 1.7%, to 1,299.24, with all 10 of the index's industry groups losing ground.
The information technology and industrial sectors fell 2.5%, while consumer discretionary was down 2.4%.
The Nasdaq Composite shed 55.22 points, or 2.3%, to 2,346.11.
The indexes furthered their losses as government data illustrated ongoing weakness in the labor market, , along with a 1% annualized increase in gross domestic product in the first quarter, slightly better than forecast. .
"The data are in line with expectations, although they continue to discredit the notion that the economy is in recession," said analysts at Action Economics.
U.S. stocks ended Wednesday with moderate gains after the Federal Reserve held interest rates at 2% and took a step toward preparing the market for rate hikes down the road.
On the housing front, builder Lennar Corp. narrowed its quarterly loss but said housing market conditions will deteriorate.
Goldman Sachs cut its rating on U.S. brokers to neutral from attractive, and put Citigroup Inc. on its conviction sell list.
Goldman said it still believes the market is putting too much weight on the possibility that another investment bank may fail, but it's "hard pressed" to find a catalyst to move the group significantly higher over the next few months.
Research In Motion tumbled 11.9% after it reported doubling its revenue and earnings in its first quarter but also signaled its plan to ramp up spending to sustain growth.
"We were concerned about the disappointing guidance, a small miss on gross margins, larger-than-anticipated operating expense increases and capital spending," said Deutsche Bank analysts. "All of this seems to indicate that growth has become incrementally harder to achieve."
Nike reported a 12% profit rise for the fourth quarter to May 31 on Europe and Asian growth but noted that U.S. orders were flat.
Oracle dropped 2.8% after it said its fiscal fourth-quarter net rose 27% but issued profit guidance for the first quarter at the low end of analyst expectations.
And, a report in The Wall Street Journal said Anheuser-Busch Cos. Inc. will formally reject InBev's $46 billion takeover offer and announce a plan to dispose of its theme park division.
In Asia, the Nikkei 225 fell marginally, the Tokyo index's sixth straight loss. . The FTSE 100 dropped 1.6% in London.
By Kate Gibson