US stocks drop more than 3% at market open
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US stocks tumbled at Tuesday's open as investors remained sceptical that government prescriptions could cure the teetering economy. The benchmark Dow Jones Industrial Average plunged 258.62 points (3.29 percent) in early trading.
AFP - US stocks dived Tuesday as investors worried about whether government remedies would cure the sick economy and banks and two automakers raced to submit restructuring plans for their survival.
The Dow Jones Industrial Average plunged 258.62 points (3.29 percent) to 7,591.79 at 1631 GMT.
The tech-studded Nasdaq dropped 55.46 points (3.61 percent) to 1,478.90 and the broad-market Standard & Poor's 500 index retreated 32.09 points (3.88 percent) to 804.79.
Traders returned to a gloomy Wall Street Tuesday from a long holiday weekend. Financial markets were closed Monday for the Presidents Day holiday.
"Having had a long weekend to digest the political dealings in Washington, market participants aren't feeling any better about things than they did before," said Patrick O'Hare, an analyst at Briefing.com.
"The bearish disposition is an issue of confidence -- or lack thereof -- as participants rue the problems that continue to besiege the global economy and the increased government intervention to combat them," he said.
President Barack Obama was set to sign into law a massive 787-billion-dollar economic stimulus package approved by Congress Friday.
But the market does not see any quick relief from the tax cuts and spending bill.
"The stimulus package itself has hurt confidence as it represents tremendous spending but in some eyes, little economic stimulation," said Al Goldman at Wachovia Securities.
Data on manufacturing activity in the New York region deepened the gloom, showing a fall in the Empire State index to another record low in February.
Wall Street headed toward November lows, when the Dow closed at 7,552.29 and the S&P 500 at 752.44.
The lack of investor confidence was reflected in the strengthening dollar, seen as a safe-haven currency in times of market uncertainty.
Investors also awaited Tuesday's government deadline for preliminary restructuring plans from General Motors and Chrysler. The two struggling automakers have received a combined 13.4 billion dollars in Treasury Department loans to help them avoid collapse.
Shares in GM plunged 10.80 percent to 2.23 dollars; Chrysler is not publicly traded. Ford, which has said it does not need government aid, skidded 5.11 percent to 1.67.
Banking shares were hammered. Bank of America tumbled 8.62 percent to 5.09, Citigroup lost 8.02 percent at 3.21 and JPMorgan Chase was down 7.70 percent at 22.79.
Wal-Mart, the only gainer among the Dow blue chips, rose 3.40 percent to 48.11, after posting a relatively small decline in quarterly profit.
Amid plummeting crude oil prices, ExxonMobil dropped 3.85 percent to 71.72 and Chevron fell 4.49 percent to 66.60.
Bonds gained as investors fled the equities rout. The yield on the 10-year US Treasury bond slumped to 2.669 percent from 2.882 percent Friday and that on the 30-year bond fell to 3.503 percent from 3.682 percent. Bond yields and prices move in opposite directions.
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