The DJIA slumped to a more than 6-year low Thursday, as fears of a prolonged recession sent stock investors heading for the exits. Treasury prices slid, boosting the corresponding yields, as investors sought safety in government debt. The DJIA closed 89 points lower at 7465.95, closing at its lowest point since November 20. That sets the index just above the so-called bear market lows hit in the late fall when the panic around the financial sector crisis peaked. The Nasdaq closed 25.15 points lower at 1442.82 and the S&P500 fell 9.48 points to close at 778.94.
In economics news, the Federal Reserve lowered its forecast for the first half of the year, noting that the economy will continue to shrink and unemployment will continue to rise.
The number of Americans filing new claims for unemployment held steady at 627,000, versus forecasts for a drop to 620,000. But the number of Americans continuing to file claims rose to a record 4,987,000.
Wholesale inflation prices gained more than expected last month, partly as a resuls of higher energy costs. The PPI rose 0.8 percent after falling 1.9 percent in December. Economists expected it would rise 0.3 percent. The so called core PPI rose 0.4 percent after rising 0.2 percent in December. Economists though it would rise just 0.1 percent.
The Philadelphia Fed Index fell to minus 41.3 from minus 24.3 in January. Economists expected it to dip to minus 25. It was the lowest reading since 1990.
The index of leading economic indicators issued by the Conference Board, rose 0.4 percent in January from a revised 0.2 percent in December. Economists expected it would rise 0.1 percent.
In company news, Hewlett-Packard reported lower earnings that met analysts' estimates on higher revenue that missed estimates in a report released late Wednesday. The company also gave a forecast for current-quarter results that is short of forecasts. HP shares fell nearly 8 percent Thursday.
Sprint Nextel reported a quarterly loss and said 1.3 million subscribers ditched its mobile phone service. But the loss narrowed from a year earlier and was smaller than analysts had expected. Revenue fell from the prior year and was shy of expectations. Investors focused on the positive and the stock rose 20 percent.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.81 percent from 2.75 percent Wednesday.
The dollar fell against the euro and gained against the yen.
U.S. light crude oil for March delivery rose $4.86 to $39.48 a barrel on the NYMEX. Prices rose after the government said crude supplies fell last week for the first time in two months.
COMEX gold for April delivery fell $1.70 to settle at $976.50 an ounce.
UK stocks closed higher on Thursday after a roller coaster rise, with rallies by oils, miners and banks offsetting falls by drug stocks and mixed company results. The FTSE100 closed 11.54 points higher at 4018.37. Energy stocks rallied as oil prices rose more than $2 a barrel to more than $37 after US government crude inventory data showed an unexpected fall in US crude stocks. BP, Cairn Energy and Tullow Oil gained between 1.2 and 2.3 percent. Miners were also higher as metal prices firmed slightly, reflecting a dip in the dollar. BHP Billiton, Xstrata, Kazakhmys, Vedanta Resources and Rio Tinto added between 2 and 6.2 percent. The Times reported that leading shareholders in Rio Tinto want Jim Leng to be reinstated as its Chairman designate in a move that threatens to throw the board of the company into turmoil.
Banks were also stronger, with RBS, Lloyds and Barclays the top three blue chip risers, which were up between 8.4 percent and 20.4 percent. Life insurers however, suffered, as worries over board defaults linked to troubles in emerging markets undermined the sector once again. Old Mutual was the top FTSE faller, down 12.7 percent, while Legal and General and Friends Provident fell between 3.5 and 6.05 percent.
Weakness in drug stocks was the main drag on the FTSE100, with GlaxoSmithKline down 1.5 percent and AstraZeneca 0.7 percent lower. Shire was off 6.6 percent. Shire fell, largely on profit-taking, after it reported full-year revenue in line with expectations, but with sales of some newer products a little below forecast.
Rexam fell 10 percent as the company highlighted in its full year results that it faced worsening market conditions. Kingfisher fell 2.4 percent after the company posted a 5.5 percent fall in fourth quarter underlying sales but said it was on track to meet analysts’ full year profit forecasts. Reed Elsevier added 4.2 percent after it reported a 24 percent rise in 2008 adjusted earnings per share, as its low exposure to advertising shielded it from the downturn. BAE Systems rose 3.6 percent after the company said it expected good growth in 2009 after earnings for the previous year came in slightly ahead of forecasts.
In Japan, the TOPIX index closed at its lowest level in 25 years today, falling 1.6 percent as bank shares slipped on worries about their European peers, while exporters largely failed to benefit from a weaker yen. Bridgestone Corp sank more than 7 percent after forecasting a bigger-than-expected slide this year as it grapples with weak demand and a stronger yen, while Seven & I Holdings dropped on news that its Seven-Eleven convenience store chain was being investigated by regulators. Nervous investors pushed the Nikkei average down 141.27 points to close at 7416.38, its lowest close since October 27. The TOPIX closed 12.06 points lower at 739.53, the lowest close since January 1984.
After the market close, Kirin Holdings, Japan's second-largest brewer, said it has agreed to buy a 43.3 percent stake in the beer unit of Philippine conglomerate San Miguel Corp for about 58.9 billion pesos ($1.2 billion).