Chevron Corp. slid the most in five years as lower fuel demand increased concern that the Federal Reserve has failed to prevent a recession. Merrill posted its steepest drop since 2001, killing a rally in financials spurred by better-than- forecast earnings at Morgan Stanley and approval for Fannie Mae and Freddie Mac to buy more mortgages.
The Standard & Poor's 500 Index, which surged the most in five years yesterday after the Fed cut its benchmark interest rate by 75 basis points, lost 32.32 points, or 2.4 percent, to 1,298.42, its biggest tumble this month. The Dow Jones Industrial Average dropped 293, or 2.4 percent, to 12,099.66. The Nasdaq Composite Index decreased 58.3, or 2.6 percent, to 2,209.96. Nine stocks declined for every two that rose on the New York Stock Exchange.
Energy shares in the S&P 500 fell the most since August 2002, losing 5.4 percent as a group, after crude dropped almost $5 a barrel. Financial shares, which surged 8.5 percent yesterday, followed up their biggest gain since 2000 with a decline of 2 percent.
The Russell 2000 Index, whose median market value is 95 percent less than the S&P 500's, fell 2.6 percent to 664.13. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, dropped 2.4 percent to 13,037.3. Based on its retreat, the value of stocks decreased by $397 billion.