NEW YORK – Stocks tumbled Wednesday as investor confidence in the economy withered amid newly-released economic data and energy giant Enron unraveled, along with its planned takeover by rival Dynegy.
The blue-chip Dow Jones industrial average lost 160.74 points, or 1.63 percent, to end at 9,711.86. The broader Standard & Poor's 500 Index slid 20.98 points, or 1.83 percent, to 1,128.52. The technology-laced Nasdaq Composite Index dropped 48 points, or 2.48 percent, to 1,887.97.
It was the lowest close for the Dow since Nov. 12, and the largest Dow drop in about a month.
In its latest survey of economic conditions around the country, the Fed found "evidence of additional slowing in most regions" and said this outweighed the faint signs of recovery reported by a few Fed districts.
The survey, compiled from information supplied by the Fed's 12 regional banks, will be used by policy-makers when they hold their last meeting of the year on Dec. 11 to consider changes in interest rates.
On Monday, the economy was officially declared by the National Bureau of Economic Research to have been in recession since March. The downturn is the first in a decade.
Many economists believe the central bank will cut interest rates for an 11th time this year at the December meeting in a continued effort to lessen the severity of the downturn.
There was weakness in all sectors, but utilities were hit especially hard on news of Dynegy's failed Enron takeover bid. The Dow Jones utilities average fell 2.9 percent, down 8.48 at 279.95. Enron plunged more than 85 percent, or $3.53, to 61 cents, after rival Dynegy Inc. pulled out of its planned $9 billion takeover of the beleaguered energy trader. The stock's trading volume soared to more than 181 million shares during the regular session, setting a new record.
Last year, Enron shares were among the market's best performers, rising more than 87 percent. So far this year, the shares have fallen more than 98 percent.
Dynegy shares fell 12 percent, or nearly 5 percent, to $35.97.
Credit rating agencies slashed Enron's bonds to junk status and pushed the once mighty company another step closer to bankruptcy.
The Enron news dragged on the market as debate swirled around a powerful rally in stocks over the past two months. Investors, still expecting an economic recovery in 2002, are worried share prices are getting too far ahead of prospects for corporate earnings.
Enron pressured other merchant energy traders and financial heavyweights Citigroup Inc. and JP Morgan Chase & Co. Inc., which lent the company a total of $1 billion.
J.P. Morgan, down $2.30 at $37.50, and Citigroup, down $2.75 at $47.80, pulled the Dow down as investors worried over their exposure to Enron. The two investment banks accounted for more than one-fifth of the Dow's losses.
The Standard & Poor's natural gas index sank 9.36 percent, reflecting the losses by Enron and Dynegy and other sectoral issues such as El Paso Corp., down $3.59 to $44.91, and Kinder Morgan Inc., off $1.03 to $47.60.
The Philadelphia Stock Exchange semiconductor index tumbled 4.70 percent. Chip leader Intel Corp. lost 55 cents to $31.76. Semiconductor shares have surged in the past two months as investors hoped they would be the first to benefit from an economic recovery.
Major U.S. airlines sank as the sector pulled back from recent gains fueled by a slump in oil prices. The S&P airline index surrendered 2.76 percent.
Continental Airlines Inc. fell $2.40 to $21.70 after an announcement of a public share offering that will add 12 percent more stock. US Airways Group Inc. fell $1.58 to $6.42 after the unexpected resignation of its chief executive on Tuesday.
Retailing issues were vulnerable to concerns that this holiday shopping season will be the worst in a decade. Gap stumbled 79 cents to $13.61 after Prudential Securities reduced its rating on the clothier to "sell" from "hold" and called its holiday merchandise poor. Electronics retailer Best Buy fell $1.18 to $69.90, while Bed, Bath & Beyond declined 74 cents to $32.34.
Nexell Therapeutics Inc. surged more than 220 percent, or $1.65 to $2.40. The drug developer said its experimental drug for a rare blood ailment has been granted "orphan" drug status by U.S. regulators. A drug company receives seven years of U.S. marketing exclusivity if an orphan drug is approved for sale by the Food and Drug Administration.
SRI/Surgical Express Inc. tanked 41 percent, or $10.35, to $14.63. The medical supplies company said it restated quarterly results, cutting reported earnings below Wall Street estimates. It also said it lost customers and failed to expand business as it had anticipated.
Flextronics International Ltd. added 80 cents to $26.35 after the contract manufacturer said business was "good" and it was comfortable with quarterly estimates.
Analysts had expected investors to lock in profits, given how strongly the market has rallied since late September. As of Monday, the Dow Jones industrials had risen 21 percent since closing at a low of 8,235.81 on Sept. 21 following the terror attacks. After two consecutive triple-digit losses, the blue chips are still about 18 percent above that low.
Declining issues outnumbered advancers slightly more than 2 to 1 on the New York Stock Exchange. Volume came to 1.39 billion shares, ahead of the 1.30 billion traded Tuesday.
The Russell 2000 index, which tracks smaller company stocks, fell 7.01, or 1.5 percent, to 453.70.
Overseas, markets were lower Wednesday with Japan's Nikkei stock average finishing down nearly 3 percent. Meanwhile, Standard & Poor's issued a double warning on Japan's economy, downgrading the country's credit rating and placing its biggest banks on credit watch. The U.S. ratings agency cited doubts about Prime Minister Junichiro Koizumi's ability to implement structural reforms.
In Europe, France's CAC-40 fell 0.9 percent, Britain's FT-SE 100 declined 1.2 percent, and Germany's DAX index lost 2.8 percent.
Reuters and the Associated Press contributed to this report.