U.S. stocks fell today over renewed concern about European banks balance sheets and fears of a deepening global recession.
The Dow Jones industrial average closed down 297.81 points, or 3.79%, to 7,552.60; the S&P 500 fell 37.17 points, or 4.56%, ending at 789.17; and the Nasdaq composite closed down 63.70 points, or 4.15%, to 1,470.66. All numbers are preliminary.
The two main indexes ended at their lowest level since Nov. 20, 2008, when the Dow industrials closed at 7,552.29 and the S&P 500 at 752.44.
Moodys highlighted an ugly exposure of European banks to eastern European companies and governments, Andrew Wilkinson, senior market analysts at Interactive Brokers Group, said in an interview. The (U.S. economic) stimulus package and any sense of resolution for the toxicity of American balance sheets is being swamped by a broad deterioration in the health of the global economy.
The slide started overnight in Asia, with markets reacting to Mondays news that Japans gross domestic product contracted by a greater-than-expected annualized rate of 12.7% in the fourth quarter as well as the resignation of Japanese Finance Minister Shoichi Nakagawa. Last week, eurozone countries also reported their steepest economic contraction in years in the fourth quarter.
European stocks extended the sell-off as Moodys Investors Service warned in a report that European banks, already weakened by the impact of the credit crisis, may have to shore up their eastern European operations.
Echoing similar concern, German Finance Minister Peer Steinbrueck warned in prepared remarks that countries of the eurozone may have to bail out their economically weakest members.
Separately, President Barack Obama signed into law a $787 billion stimulus bill aimed at stabilizing the jobs market and the economy.