Hewlett-Packard, the world’s largest personal-computer maker, fell 7.9 percent and technology companies were the biggest drag on the Standard & Poor’s 500 Index. Bank of America Corp. and Citigroup Inc. fell 14 percent each to lead the Dow’s retreat. Prudential Financial Inc. slid 16 percent after losing its ability to borrow under a government program because of a credit-rating downgrade.
The S&P 500 slid 1.2 percent to 778.94, extending its 2009 loss to 14 percent in its worst start to a year. The Dow dropped 89.68 points, or 1.2 percent, to 7,465.95, the lowest since October 2002. The Russell 2000 Index declined 1.5 percent.
The S&P 500 fell for a third day yesterday as the Federal Reserve cut its forecast for the U.S. economy this year, while government reports showed industrial production shrank more than forecast and housing starts slid to a record low last month.
Today, a Federal Reserve gauge of manufacturing in the Philadelphia region shrank at the fastest pace in more than 18 years. The Conference Board’s index of leading economic indicators climbed more than forecast as a jump in money supply masked continued deterioration elsewhere in the economy.
The S&P 500 Financials Index retreated 5.2 percent to its lowest level since January 1995. Prudential Financial, the second-largest U.S. life insurer, fell $3.59 to $19.02. Prudential’s short-term debt rating was lowered by Fitch Ratings, rendering the holding company ineligible for the U.S. commercial paper program.
Financial stocks led the S&P 500’s 38 percent decline in 2008, its steepest yearly loss since 1937, as the worst U.S. real-estate slump since the Great Depression produced credit losses of more than $1 trillion globally.
The group, which lost 57 percent of its value last year, has fallen 40 percent this year as rising unemployment casts doubt on the ability of consumers to stay current on other forms of debt. The threat was highlighted today after the Labor Department said the number of Americans collecting jobless benefits jumped to a record 4.99 million two weeks ago, signaling the job market is still deteriorating.