U.S. stocks tumbled Wednesday, sending the Dow Jones Industrial Average into a bear market, after oil rose to a record and steelmakers and coal producers retreated on concern the economic slump will worsen.
The Standard & Poor's 500 Index slid to its lowest since July 2006, as crude climbed above $143 a barrel, dimming the outlook for corporate profits. General Motors Corp., the biggest U.S. automaker, plunged to a 54-year low on Merrill Lynch & Co.'s warning that "bankruptcy is not impossible."
Nucor Corp. led the steepest decline in steel shares since 2002, as concern grew that the auto slump will cut demand and the government said metals orders decreased. Peabody Energy Co., the largest U.S. coal producer, slid as European prices fell the most since 2005.
"Investor sentiment is clearly miserable right now," said Wayne Wilbanks, who oversees about $1.2 billion as chief investment officer of Wilbanks Smith & Thomas Asset Management in Norfolk, Va. "A lot of this misery among investors is starting to get priced into the indices."
The Dow fell 166.75, or 1.46 percent, to 11,215.51, the lowest close since August 2006. It now stands 20.82 percent below its Oct. 9, 2007, record of 14,164.53. The last bear market ended in October 2002.
The S&P 500 plunged 23.38, or 1.8 percent, to 1,261.53, extending its 2008 loss to 14 percent.
The Nasdaq Composite Index slid 53.51, or 2.3 percent, to 2,251.46.
The S&P has dropped 19.4 percent from its October record, just shy of the 20 percent pullback that signals a bear market. The Nasdaq has lost 21 percent from a nearly six-year high on Oct. 31.
GM has led the Dow's retreat into a bear market, slumping 74 percent since the 30-stock gauge's record of 14,164.53 on Oct. 9. Dow components Citigroup Inc., American International Group Inc. and Bank of America Corp. each tumbled more than 50 percent over the same period, as losses and writedowns at the world's biggest financial institutions topped $400 billion following the collapse of the U.S. mortgage market.
Since 1962, the Dow has experienced 11 bear markets before this one, according toresearch and money-management firm Birinyi Associates Inc., based in Westport, Conn. Declines averaged 29 percent and lasted 322 days, Birinyi data show. The biggest was a 45 percent drop during the 694-day period from January 1973 to December 1974.
On Wednesday, GM shares sank $1.77, or 15 percent, to $9.98, the lowest since September 1954. The automaker was cut to "underperform" from "buy" at Merrill on bankruptcy concerns. GM, battered by the slowest U.S. automotive market in 15 years, may need to raise as much as $15 billion, Merrill said.
Meanwhile, crude oil for August delivery rose 2 percent to $143.74 a barrel in New York after the Energy Department said supplies fell 1.98 million barrels to 299.8 million in the week ended June 27, the lowest since January. The price Wednesday touched $143.91, the highest since futures started trading in 1983.
Oil's jump helped drag down a measure of industrial shares in the S&P 500 by 3 percent to the lowest level since August 2006. FedEx Corp., the second-largest U.S. package-shipping company, dropped $1.67 to $74.70. Caterpillar Inc., the world's biggest maker of earthmoving equipment, declined $3.67 to $70.42.
"As long as oil is going higher every day, it's difficult to say that we will hit a bottom," said Jack Ablin, who oversees $65 billion as chief investment officer at Harris Private Bank in Chicago.