NEW YORK – U.S. stocks plummeted Thursday, with the Dow industrials tumbling more than 300 points, on signs of further weakness in the housing market and deteriorating conditions for corporate buyouts.
The Dow Jones industrial average dropped 311.50 points, or 2.26 percent, to close at 13,473.57. The Standard & Poor's 500 Index was down 35.43 points, or 2.33 percent, at 1,482.66. The Nasdaq Composite Index was down 48.83 points, or 1.84 percent, at 2,599.34.
The S&P shed about $300 billion in market value in the worst single session since the Feb. 27 global market sell-off, with surprisingly weak earnings reports also weighing on stocks. Even with the sharp decline, the Dow and S&P 500 are within 5 percent of their respective record highs.
A drop in quarterly profit at Exxon Mobil Corp. (XOM), helped wipe out more than $16 billion in market value of the world's largest publicly traded company.
Financial shares took a beating on growing evidence that problems in the subprime mortgage market are spreading, making financing the corporate buyouts that drove the market's spring rally more difficult.
"It was easy credit that helped fuel stock prices," said Peter Boockvar, equity strategist at Miller Tabak & Co. in New York. Worsening credit conditions means "less liquidity for private equity, stock buybacks, business expansion, consumer spending, global growth."
Volume was well above average on the New York Stock Exchange, with decliners far outpacing advancing shares by about 10 to 1.
The Chicago Board of Options Exchange's volatility index, a key gauge for measuring investor anxiety, at one point shot to its highest level in over 13 months.
In late morning, the NYSE imposed trading curbs as losses mounted to restrict large-block sales when a stock is falling.
Chrysler Group's announcement this week of a postponement of a $12 billion loan to finance a private equity takeover is fanning concern the environment for deal financing may be getting tougher.
Beazer shares fell 8.7 percent to $15.56 while D.R. Horton was down 1.8 percent at $17.16. The weak results come a day after rivals Ryland Group Inc (RYL) and Pulte Homes Inc. (PHM) also reported second-quarter losses.
In addition, government data showed a sharper-than-expected drop in June new home sales and home builder WCI Communities Inc. (WCI) said the real estate market downturn was hurting its push to sell itself. The stock fell 12.8 percent to $9.87 on the NYSE.
Exxon led decliners on the S&P 500 and Dow industrials, falling 4.9 percent to $88.23.
Dow Chemical Co. (DOW) reported a slight increase in quarterly earnings, but its shares fell 4.86 percent to $43.45, as some analysts argued that a lower-than-expected tax rate helped boost earnings more than improved demand.
About 2.78 billion shares changed hands on the NYSE compared with last year's estimated daily average of 1.84 billion. On Nasdaq, about 3.39 billion shares traded, well above last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 5 to 1 on Nasdaq.