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Dow sinks 218 on housing, banking
Econoic concerns added up to bad news for the markets as the major indexes all dropped more than 1.5 percent.
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NEW YORK - Wall Street resumed its slide Monday as investors absorbed a gloomy outlook for the banking sector as well as bleak news about housing. The major stock market indexes each fell more than 1.5 percent, with the Dow Jones industrial average giving up more than 200 points.
Concerns about the banking sector dominated the session. Goldman Sachs Group Incorporated's downgrade of large banks, and its estimate that Citigroup Inc. would have to write down $15 billion over the next two quarters because of its exposure to risky debt, unnerved Wall Street.
Other sectors suffered big hits during the session, including homebuilders and airlines.
The latest concerns about the housing sector arose after a downbeat survey from the National Association of Homebuilders and a lowered forecast from home-improvement retailer Lowe's Companies.
The worry on Wall Street is that the housing market is getting so weak it will crimp consumer spending, which accounts for about 70 percent of economic activity and has helped keep the economy afloat. Ahead of the holiday shopping season, any signs that Americans are pulling back could prevent a December rally.
"I think that a lot of folks are digesting the news from last week and they're worried about the economy and the ability to grow earnings at the larger companies in America," said Rob Lutts, chief investment officer at Cabot Money Management Inc. in Salem, Mass.
The Dow industrials fell 218.35, or 1.66 percent, to 12,958.44.
Broader stock indicators also declined. The S&P 500 index fell 25.47, or 1.75 percent, to 1,433.27, and the Nasdaq composite index fell 43.86, or 1.66 percent, to 2,593.38.
The Russell 2000 index of smaller companies fell 19.17, or 2.49 percent, to 750.33. The pullback left the Russell firmly in negative territory for the year, with a drop of 4.74 percent. Investors often view smaller companies as more likely to be hard-hit in a slowing economy because they might not as easily get by on thin profit margins as would some big companies with overseas operations.
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