By Eric Martin
Nov. 20 (Bloomberg) -- U.S. stocks slid and the Standard & Poor's 500 Index plunged to its lowest level in 11 years after economic reports depicted a deepening recession and lawmakers postponed a vote on a plan to salvage the auto industry.
The S&P 500 extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history. Chesapeake Energy Corp. and National-Oilwell Varco Inc. sank more than 21 percent after crude fell to a three-year low on concern the slumping economy will crush demand. JPMorgan Chase & Co. lost 18 percent and Citigroup Inc. dropped 26 percent as concern the recession will trigger more bankruptcies pushed the cost of insurance against corporate defaults to an all-time high.
``We're just trying to stay away from the window,'' said James Paulsen, who helps oversee about $220 billion as chief investment strategist at Wells Capital Management Inc. in Minneapolis. ``This isn't about fundamentals, it's not about bad balance sheets, it's about fear and confidence.''
The S&P 500 slid 6.7 percent to 752.44, under the low of 776.76 reached during the bear market in 2002. The Dow Jones Industrial Average sank 444.99 points, or 5.6 percent, to 7,552.29. The Nasdaq Composite decreased 5.1 percent to 1,316.12. Twelve stocks retreated for each that rose on the New York Stock Exchange.
Global Rout
The S&P 500 extended its plunge from an October 2007 record to almost 52 percent in the worst bear market since the Great Depression. Concern the recession is worsening was spurred after jobless claims approached the highest level since 1982, the index of leading economic indicators fell for a third time in four months and the Federal Reserve said manufacturing in the Philadelphia area shrank at the fastest pace in 18 years.
Seventeen companies in the S&P 500 lost more than one-fifth of their market value today, as all 10 of the index's main industry groups slid at least 3.5 percent.
More than 2.2 billion shares changed hands on the floor of the NYSE, its busiest trading session since Oct. 10.
Europe's benchmark index slumped 3.6 percent, while Asia's sank 5.1 percent. Both declined to the lowest levels in more than five years. The MSCI Emerging Markets Index of developing markets lost 5.4 percent.
Treasury yields declined to record lows, with two-year note rates dropping below 1 percent for the first time, as investors sought the safety of government debt.
`Ugly Mess'
``It's an ugly mess out there,'' said Randy Bateman, who oversees $15 billion as chief investment officer of the asset management unit of Huntington Bancshares Inc. in Columbus, Ohio. ``The economy is confirming it is very, very weak.''
Chesapeake, a producer of oil and natural gas, lost $5.32 to $13.98. National-Oilwell, which makes energy production equipment, retreated $4.86 to $17.86.
Crude oil fell 7.5 percent to $49.62 a barrel, its lowest settlement since May 2005. Energy shares declined the most among 10 industries in the S&P 500, losing 11 percent collectively.
Exxon Mobil Corp., the largest U.S. energy company, fell the most in a month, losing $4.91, or 6.7 percent, to $68.51. Chevron Corp., the second-largest U.S. oil producer, plunged $6.21, or 8.8 percent, to $64.40.
JPMorgan Chase, the largest U.S. bank by market value, lost $5.09 to $23.38, its lowest price since March 2003. Citigroup sank $1.69 to $4.71, an almost 14-year low.
Citigroup, Goldman
Citigroup slumped even after Saudi billionaire Prince Alwaleed bin Talal said he would boost his stake in the New York-based company. The bank is urging the Securities and Exchange Commission to revive a prohibition on short-selling financial stocks, according to a person familiar with the matter.
SEC spokesman John Nester declined to comment. Citigroup spokesman Michael Hanretta didn't return a phone call seeking comment.
Goldman Sachs Group Inc., once the biggest and most profitable U.S. securities firm, fell below its initial public offering price of $53, wiping out 10 years of gains. Goldman lost $3.18, or 5.8 percent, to $52.
Contracts to protect against corporate default rose to an all-time high. Credit-default swaps on the Markit CDX North America Investment-Grade index jumped 14 basis points to a record 261, according to broker Phoenix Partners Group.
Analyst Paul Miller at FBR Capital Markets in Arlington, Virginia, said as much as $1 trillion in capital may be needed to shore up the financial system.
Insurance Losses
Life insurance stocks slumped for a fifth straight day on concerns that falling equity markets will cause losses on retirement products.
Lincoln National Corp. plunged $2.24, or 31 percent, to $5.07. The company said yesterday it expects a charge of as much as $300 million from the stock market slump in October.
MetLife, the largest U.S. life insurer, slipped $2.52, or 13 percent, to $16.48.
Life insurers including Lincoln National, MetLife and No. 2 Prudential Financial Inc. have lost more than two-thirds of their market value this year as falling stock markets pressured results from annuities and raised concerns the companies will need to raise capital.
The S&P 500 Financials Index sank 11 percent to its lowest level since July 1995.
Benchmark indexes briefly erased declines in midday trading after a congressional aide said senators had agreed on a bipartisan plan to rescue the U.S. auto industry.
Stocks resumed their slide and automakers pared gains after Democratic congressional leaders blocked immediate action on a bailout for the cash-strapped companies and told the industry to come up with a workable plan to submit to lawmakers in December.
GM, Ford
General Motors Corp. added 9 cents, or 3.2 percent, to $2.88 after climbing as much as 43 percent to $4, while Ford added 13 cents to $1.39, paring a 48 percent rally.
Alcoa Inc., the largest U.S. aluminum producer, had the third-steepest decline in the Dow average after Citigroup and JPMorgan, losing 16 percent to $6.85. Aluminum dropped the most in three years and copper fell to a three-year low in London as consumption of industrial metals in the housing and auto industries tumbled.
Dell Inc. dropped 54 cents to $9.81. After the close of trading, the world's second-largest personal-computer company reported profit that topped analysts' forecasts thanks to cost cuts and cheaper production methods. Sales fell 3.1 percent. In after-hours trading, Dell climbed 5 percent to $10.30.
December futures on the S&P 500 added 0.3 percent at 4:36 p.m. in New York.
Earnings Slump
The S&P 500's plunge from its October 2007 record came as earnings for companies in the index decreased for five straight quarters and worldwide writedowns and credit losses stemming from the collapse of the subprime mortgage market reached $965 billion.
The index rose or fell at least 1 percent in 86 percent of October's trading days, making it the second-most volatile month in its 80-year history, according to S&P analyst Howard Silverblatt. Only November 1929 produced bigger swings, he said.
Profits slumped 17 percent on average at companies in the index that have reported third-quarter results, according to Bloomberg data. Analysts expect a 9.5 percent decline in full- year earnings, based on estimates compiled by Bloomberg.
``It's probably going to take another year for things to calm down, for people to feel a little more comfortable with the economy,'' said Russell Rolnick, senior vice president for Lenox Advisors Inc., which oversees more than $1 billion in New York. ``People these days seem to be more interested in capital preservation than appreciation.''
-- With reporting by Elizabeth Stanton and Lynn Thomasson in New York. Editors: Michael Regan, Nick Baker
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
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