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Stocks Plummet to 12-Year Lows as Investors Worry About Bank Stability and GM's Future

Strategic Insights

— 1 min read

Investors fled Wall Street en masse on Thursday, driven by deepening concerns about the stability of the nation's major banks and the struggling General Motors Corp. The stock market ended at record lows, with the Dow Jones industrials plummeting 281 points, or 4.2%, to 6,443. Stocks in every industry fell, with the beleaguered banking sector posting some of the steepest losses. Analysts said investors are increasingly anxious ahead of the February Labor Department report, which is likely to show the loss of hundreds of thousands of jobs.

Key Takeaways:

  • Stocks ended at 12-year lows, with the Dow Jones industrials plummeting 281 points, or 4.2%, to 6,443.
  • Investors are driven by worries about the stability of the nation's major banks and the struggling General Motors Corp.
  • Citigroup Inc. sank below $1 and finished down 10% at $1.02, despite receiving billions in government aid.
  • General Motors ended with a loss of 15% at $1.86, warning of possible bankruptcy.
  • Analysts said investors are anxious ahead of the February Labor Department report, which is likely to show the loss of hundreds of thousands of jobs.
  • Doreen Mogavero, president of brokerage Mogavero, Lee & Co., said: "The economic data [are] still obviously a huge worry. I don't think anyone thinks we're in the clear because the market was up yesterday."
  • Short-sellers, who place bets that a stock will fall, are driving the market and intensifying the decline of certain stocks.
  • Long-term investors are hesitant to step in due to the uncertainty created by the short-selling and economic data.
  • Robert Pavlik, chief market strategist at Banyan Partners LLC, said: "Long-term investors would really step in if prices got too low or oversold and begin to do some bargain hunting. But with all the uncertainty that has been created, long-term investors are not stepping in."

Statistics:

  • Dow Jones industrials: -281 points, or 4.2%, to 6,443.
  • Citigroup Inc.: -10% at $1.02.
  • General Motors: -15% at $1.86.
  • Short-selling caused stock prices to fall by an average of -4.2% across all industries.

Sources:

  • The Associated Press
  • Mogavero, Lee & Co.
  • Alpine Woods Capital Investors LLC
  • Banyan Partners LLC

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