Stocks plummeted today to a 21-month low on renewed weakness in the financial sector and after the Federal Reserve signaled its next move may be to raise interest rates to quell inflation pressure.
The Dow Jones industrial average closed down 358.41, or 3.03%, at 11,453.42 the lowest close for the Dow since 11,396.84 on Sept. 11, 2006.
The S&P 500 fell 38.82, or 2.94%, ending at 1,283.15; and the Nasdaq composite closed down 79.89, or 3.33%, at 2,321.37. All numbers are preliminary.
Financial issues again pressured the market as analysts at Goldman Sachs put Citigroup Inc. on their Americas conviction sell list and expected Citigroup to write down another $8.9 billion in assets. The analysts also anticipated Merrill Lynch & Co. to write down another $4.2 billion.
Global markets still reacted to the Feds concern in its statement Wednesday that the upside risks to inflation and inflation expectations have increased. In Europe, the Dow Jones STOXX 600 index of top European stocks ended at its lowest level since Oct. 25.
The fed funds futures market is priced for the Fed to deliver its first rate hike by the Sept. 16 Federal Open Market Committee meeting, said Anthony Crescenzi, bond market strategist at Miller Tabak + Co.
Talk that Libya may curtail oil production sent the U.S. crude oil benchmark rocketing above $140 a barrel for the first time. The Light Sweet Crude contract for August delivery jumped nearly $5 on the New York Mercantile Exchange to close at $139.64.