Wall Street Slides On Financial Woes, Dollar

NEW YORK (MarketWatch) -- Wall Street shares were sliding on Wednesday, with the Dow industrials down over than 250 points, its path greased by a combination of persistent financial woes, the dollar at record lows, surging oil, and General Motors Corp.'s largest-ever quarterly loss.

"It's very difficult to make an argument for stocks today," said Art Hogan, chief market strategist at Jefferies & Co.

The dollar's decline coincided with thinking that China would look to diversify parts of its vast foreign-currency holdings into other currencies like the euro, which hit a fresh high against the greenback -- climbing as high as $1.4730.

More recently, the euro was trading at $1.4654, off its highs but well above its level of $1.4555 in late U.S. trading Tuesday. .

The Dow Jones Industrial Average was down 241 points, or 1.8%, to 13,419 in afternoon action. All but 2 of its 30 components traded in the red, led by GM , off 5.5%.

Insurance giant American International Group Inc. , also a Dow component, saw its shares slide 5.7% ahead of its quarterly report.

"There has been speculation in recent weeks that the company will announce write-downs when the earnings are released after the closing bell," said Frederic Ruffy, analyst, Optionetics.

Others financial stocks also took it on the chin, as a bearish outlook from Washington Mutual Inc. and speculation that Morgan Stanley would post large subprime-related losses weighed on the sector.

GM's shares fell after the leading U.S. automaker reported third-quarter net losses of $39 billion, or $68.85 a share, due to an accounting change. .

The S&P 500 shed 29 points, or nearly 2%, to 1,491, while the Nasdaq Composite dropped 46 points, or 1.6%, to 2,778.

Volume on the New York Stock Exchange came to 928 million, and declining stocks outpaced those advancing by 7 to 1. On the Nasdaq, 1.5 billion shares were traded, with more than four times as many declining stocks as gainers.

Black gold and heavy metal

U.S. crude for December delivery climbed as high as $98.62 a barrel in electronic trading overnight.

Trading was turbulent. More recently, crude was up 64 cents at $97.34 on the New York Mercantile Exchange, with the contract coming off its earlier highs after Energy Department reported a lesser-than-expected drop in oil inventories. .

In other Nymex commodities trading, gold futures again surged to their highest level since 1980, as the sell-off in the dollar boosted the metal's appeal as an inflation hedge. Gold for December delivery recently gained $11.40 to $834.80. .

Treasury prices were mostly higher, with the benchmark 10-year note gaining 4/32 to 103 2/32 as its yield moved down to 4.361%.

More earnings highlights

Time Warner Inc. tallied a 53% decline in third-quarter profit from a year ago, with the world's largest media company hurt by the shift at AOL to an advertising-driven portal.

Time Warner's stock slid 1.3%.

After the close, Cisco Systems Inc. is slated to report first-quarter results. The technology giant's overseas strength expected to offset soft demand in the U.S. corporate sector.

In recent action, Cisco stock slid 2.3%.

Investors bypassed early economic data that, barring the dollar's plunge and other bearish factors, would normally have offered an opening lift.

The Labor Department reported a 4.9% rise in productivity for the third quarter, the fastest pace of growth seen in four years.

The report included a 0.2% drop in unit labor costs, signaling low wage inflation. .

The data "would probably give us a bit of a jump, but unfortunately when we focus on things like a record-low dollar against every currency on the globe, it's a tough day to keep our heads above water," said Hogan.

Later economic data had the Commerce Department reporting that sales generated by U.S. wholesae merchants increased faster than their inventories in September.

Border crossings

Overseas, European markets lost ground for the fourth time out of five sessions, with travel-related stocks such as British Airways taking the brunt of the fall as oil prices got a lift from the continued decline in the U.S. dollar. .

Earlier, Asian markets ended mixed, with Hong Kong stocks lifted again by local property issues while Australian shares gained on higher prices for resource firms as crude neared the $100-a-barrel milestone. .

By Kate Gibson