Microsoft tumbled 12 percent after saying it’s no longer able to give forecasts for the rest of its fiscal year as the slumping economy crimps demand for software. Fifth Third, Ohio’s second-largest bank, dropped 29 percent to a 21-year low after posting a third consecutive quarterly loss. Financials led declines in nine of ten industry groups in the Standard & Poor’s 500 Index after initial claims for unemployment benefits matched a 26-year high and housing starts fell to a record low.
The S&P 500 retreated 1.5 percent to 827.5. The Dow Jones Industrial Average lost 105.3 points, or 1.3 percent, to 8,122.8. The Russell 2000 Index decreased 3.1 percent.
The S&P 500 is down 8.4 percent this year as analysts cut earnings estimates and companies slash their own profit forecasts as the recession reduces demand for everything from crude oil to computer chips. The index surged 4.4 percent yesterday as elements of Obama’s plan to shore up lenders and Bank of America share purchases by company executives sent financials up 15 percent, their biggest rally in two months.
Europe’s Dow Jones Stoxx 600 Index slipped 0.9 percent. The MSCI Asia Pacific Index rose 0.3 percent.