Declines in banks and other financial companies led a broad slide in U.S. stocks Thursday afternoon, but the market recovered somewhat from even steeper losses earlier in the day. The slump reflected heightened concerns about global economic weakness, even as Federal Reserve Chair Janet Yellen reiterated her confidence in the U.S. economy. The latest slide put the stock market on track for its fourth loss in a row.
KEEPING SCORE: The Dow Jones industrial average was down 276 points, or 1.7 percent, to 15,638 as of 3:03 p.m. Eastern Time. It had fallen nearly 400 points earlier. The Standard & Poor's 500 lost 24 points, or 1.4 percent, to 1,826. The Nasdaq composite fell 18 points, or 0.4 percent, to 4,264. All three indexes are down at least 10 percent since the beginning of the year.
GLOBAL JITTERS: Investors are increasingly worried that the mounting market turmoil could put a brake on the global economy at a time it is already struggling with a litany of issues, including China's slowdown, low inflation and plunging energy markets. Fed Chair Janet Yellen, giving her semiannual report to Congress on Wednesday, cautioned that global weakness and falling financial markets could depress the U.S. economy's growth. That could, in turn, slow the pace of Fed interest rate hikes. In her second day of testimony before U.S. lawmakers Thursday, Yellen acknowledged concern about the global economic environment, but said it was too early to tell how big the effect would be on the U.S.
THE QUOTE: Investors are losing confidence in central bank policies, said Anthony Valeri, investment strategist at LPL Financial. "(Central banks) have done all they can do and these policies may not improve economic growth or may not support financial markets," he said.
SECTOR VIEW: All 10 sectors in the S&P 500 index were down. Financials stocks fell the most, down 3.1 percent. Energy stocks slumped 2.9 percent as oil prices continued to decline.
BANK SLUMP: Several major banks were trading lower. Citigroup fell $2.32, or 6.2 percent, to $35.09, while JPMorgan slid $2.41, or 4.3 percent, to $53.11. Bank of America shed 84 cents, or 7.1 percent, to $11.14. Wells Fargo lost $1.07, or 2.3 percent, to $45.10.
MORTGAGE HANGOVER: Morgan Stanley fell 4.8 percent after it agreed to pay $3.2 billion to settle federal and state claims that the lender engaged in practices that contributed to the 2008 financial crisis, including misrepresentations about the value of mortgage-backed securities. The stock slid $1.10 to $21.60.
STEEP DIVE: Boeing plunged 7 percent following a published report that the Securities and Exchange Commission is investigating the aircraft manufacturer over accounting practices. The report comes a day after Boeing announced plans to eliminate an unspecified number of commercial airplane jobs as part of a cost-cutting effort. The stock was the worst-performer in the Dow, losing $8.07 to $108.29.
ENERGY OUTAGE: Another drop in oil and natural gas prices sent shares in several energy companies lower. Southwestern Energy lost 59 cents, or 6.9 percent, to $7.99, while Marathon Oil fell 47 cents, or 6.6 percent, to $6.66. NRG Energy shed $1.02, or 9.5 percent, to $9.68.
STRONG QUARTER: Cisco Systems jumped 9.6 percent a day after the seller of routers, switches, software and services reported better-than-expected quarterly results and announced a stock buyback plan and dividend increase. The stock climbed $2.16 to $24.67.
OVERSEAS MARKETS: In Europe, Germany's DAX dropped 2.9 percent, while France's CAC 40 slid 4.1 percent, dragged down by a 13 percent drop in the shares of bank Societe Generale, which warned about its profits. Britain's FTSE 100 shed 2.4 percent. In Asia, some indexes reopened after a holiday and caught up with several days of market turmoil. Hong Kong's Hang Seng dived 3.9 percent after opening as much as 5 percent lower. South Korea's Kospi staged its biggest daily drop in nearly four years, down 2.9 percent. China and Taiwan will reopen on Monday. Japan was closed Thursday for a separate public holiday.
ENERGY: Benchmark U.S. crude oil fell $1.24, or 4.5 percent, to close at $26.21 a barrel in New York. Brent crude, a benchmark for international oils, fell 78 cents, or 2.5 percent, to close at $30.06 a barrel in London. Natural gas fell 5.2 cents, or 2.5 percent, to close at $1.994 per 1,000 cubic feet.
BONDS AND CURRENCIES: Bond prices rose. The yield on the 10-year Treasury slid to 1.63 percent from 1.71 percent late Wednesday. In currency markets, the dollar took a dive as investors adjusted their expectations for fewer interest rate increases in the U.S. It fell to 112.01 yen from 113.35 yen. It also fell against the euro, which was up to $1.1338 from $1.1282.