GM downgrade, oil rise slam stocks; worst may not be over
HOW BAD IS IT?
USATODAY-Investors who thought they’d seen the worst of 2008 are seeing reasons for hope vanish one by one.
The optimism that stocks had bottomed in March and would enjoy a second-half rally suffered a serious setback Thursday. Selling slammed the Dow Jones industrial average 358.41 points to 11,453.42, its lowest since September 2006, as fears about oil and the health of major U.S. companies intensified.The day started out bad and never recovered following a report from Goldman Sachs advising its clients to sell General Motors (GM) and Citigroup (C), once the pre-eminent companies in their industries. GM stock hit its lowest level in decades, topping off a decline of 45% since the Dow set its old 2008 low in March.
But the real problem once again was oil, which soared $5.09 to a record $139.64 a barrel after OPEC’s president said prices could reach $170 by summer and Libya said it might reduce output.
“People are getting nervous,” says Todd Leone, trader at Cowen. “I’m not sure what gets us out of it. Maybe just time.”