NEW YORK - Stocks slid on Tuesday, sending Wall Street near bear-market lows as grim regional manufacturing data signaled the recession is worsening, while signs of more trouble in the banking sector sank financials.
Financial shares led the way down on fears of more trouble for European banks after Moody's Investors Service said various eastern Europe banks faced downgrades and that recession in emerging Europe will be more severe than elsewhere due to large imbalances.
Earlier dismal economic data from Japan set the tone and helped yank oil prices below $35 a barrel. Chevron and Exxon Mobil were the Dow's biggest drags, sliding nearly 5 percent and 4 percent respectively.
U.S. banks, battered by the failure so far of action to save the financial system to take hold, fell further, with shares of JPMorgan
Underlying all that is the uncertainty as to where the bottom is both in the economy and the market, said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
As we retest these November lows, the reality that sets in is that we may have another leg to go down in the economy and the market. Therefore we see stocks being sold off.
The Dow Jones industrial average <.DJI> shed 239.03 points, or 3.04 percent, to 7,611.38. The Standard & Poor's 500 Index <.SPX> gave up 30.70 points, or 3.71 percent, at 796.14. The Nasdaq Composite Index <.IXIC> lost 52.54 points, or 3.42 percent, to 1,481.82.
Wall Street's slide pulled the S&P 500 below 800 for the first time since the intraday bear market low of November 21.
A report showing that manufacturing production in New York state fell to a record low in February stirred worries about the deepening recession among investors, adding to fears that a new U.S. economic stimulus package won't be a quick fix.
The low reading in manufacturing and data from Japan that showed the world's second-biggest economy had sunk deeper into recession helped push gold to a fresh seven-month high, as investors moved to bullion as a safe haven.
Energy shares slid, with Exxon Mobil
General Motors Corp
Sentiment was further dampened by news that the Securities and Exchange Commission had charged Houston-based Stanford Financial Group with massive alleged fraud involving a multibillion-dollar investment scheme.
President Barack Obama is due to sign a $787 billion economic stimulus bill into law on Tuesday, but investors are fearful that the plan will not blunt the impact of the recession soon enough. The White House hopes the package will save or create 3.5 million jobs.
(Editing by James Dalgleish)