Wall Street Extends Plunge; Dow Down 306

[Purveyor]

By TIM PARADIS – 18 minutes ago

NEW YORK (AP) — Wall Street extended its 2008 plunge Thursday, tumbling after a regional Federal Reserve report showed a sharp decline in manufacturing activity and as investors feared that downgrades of key bond insurers could trigger further trouble with souring debt.

The Dow Jones industrial average lost more than 300 points, or nearly 2.5 percent, and skidded to its lowest close since March 16. The Standard & Poor's 500, the index closely watched by market professionals, fell nearly 3 percent.

Stocks opened higher but quickly gave up their gains after the Philadelphia Federal Reserve said its survey of regional manufacturing activity registered a negative 20.9 from a revised reading of negative 1.6 in December. The reading came in well short of what Wall Street had been expecting and underscored the seriousness of the economic concerns that have gripped both Wall Street and Washington in recent weeks.

Credit concerns also dogged Wall Street after rating agency Moody's Investors Service placed bond insurer Ambac Assurance Corp. on review for a possible downgrade. That possibility alarmed Wall Street because it would place all bonds insured by Ambac on review as well. Ratings agencies are concerned that bond insurers would be unable to absorb a spike in claims.

Investors fears of a slowing economy again dominated trading.

"The Philadelphia Fed just announced dreadful numbers," said John O'Donoghue, co-head of equities at Cowen & Co. He said if you look back at Philadelphia Fed data for similar numbers, it takes you back to the 2001 to 2002 recession.

"It's not rocket science — the economy is slowing dramatically, and it's being reflected in economic reports."

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http://ap.google.com/article/ALeqM5gHs5OM3gFG_DytQQZFbWfgPT08MAD8U7SL500

[nadinbrzezinski]

1. Now to all the naysayers... we told you so...

I hate to say it, but this trend started in what Nov of 2007 and will continue

Given all the mechanisms built into the system this will not look like the 1929 crash... but the end result might be very similar

And for godsakes, my retired parents worry me to no end

[lyonn]

2. Guess this means that this is not the usual "correction"?

Ah hell, the powers that be will just dump more worthless dollars into the economy and hope it will satisfy the beast until George is out of office and then blame the damn Dems. You know how they always screw up a perfectly good economy (sarcasm).

[nadinbrzezinski]

3. They already did, to the order of half a trillion dollars world wide!

they are quickly running out of room to manouver