American International Group Inc., the world's largest insurer, declined the most in two weeks after posting the biggest quarterly deficit in its 89-year history. Sprint Nextel Corp. slumped to a price last seen in 2002 on an analyst report predicting more subscriber defections at the third-biggest U.S. wireless carrier. All 10 industries in the Standard & Poor's 500 Index fell, led by banks and phone companies.
The S&P 500 lost 34.37 points, or 2.5 percent, to 1,333.31 at 2:40 p.m. in New York. The Dow Jones Industrial Average decreased 302.52, or 2.4 percent, to 12,279.66, its steepest retreat since Feb. 5. The Nasdaq Composite Index slid 55.64, or 2.4 percent, to 2,275.93. About 10 stocks dropped for every one that rose on the New York Stock Exchange. Shares fell in Europe and Asia.
The S&P 500 extended its February decline to more than 3 percent after the National Association of Purchasing Management- Chicago said its business barometer contracted as production and employment weakened, boosting concern the worst earnings slump in six years will continue.
Profits at S&P 500 companies fell 23 percent on average in the fourth quarter of 2007 and analysts surveyed by Bloomberg expect a 3 percent year-on-year drop in the first quarter, followed by profit growth of 13.7 percent for the year. Two months ago, the median forecasts were for increases of 4.7 percent in the first quarter and 15.1 percent for the year.