NEW YORK — Wall Street suffered its second big drop in a week Wednesday, with investors worried about spreading fallout from the credit crisis at banks and about a dollar that just keeps getting weaker. The Dow Jones industrial average fell more than 360 points – just about matching its pullback of last Thursday.
A passel of worries tormented investors, including comments by New York Attorney General Andrew Cuomo about conflicts of interest in the mortgage industry that exacerbated declines among bank stocks.
Meanwhile, the dollar swooned amid speculation that China will seek to diversify some of its foreign-currency stockpiles beyond the greenback, and General Motors further dampened sentiment by posting a record loss tied to an accounting adjustment.
Oil hit a record, rising above $98 per barrel before retreating, and gold pushed higher, moves exacerbated by an anemic dollar.
The fear with a drop like Wednesday’s is whether it is part of not just a correction, which is a 10 percent pullback in stock prices, but that it could be the beginning of a bear market. With the volatility that has swept Wall Street since the summer and triple- digit moves in the Dow becoming commonplace, no one can be sure.
Still, the concern on the Street is that the extent of the fallout from the credit-market crisis that has led to billions of dollars in losses for major banks and investment firms is not yet known.
The Dow fell 360.92, or 2.64 percent, to 13,300.02. The Dow, which had gained 117 points Tuesday, had fallen 362.14 last Thursday, reflecting the extreme fractiousness on Wall Street these days.
It was the third time in a month the blue-chip index has dropped by more than 350 points and leaves the Dow up 6.71 percent for the year.
Broader stock indicators also pulled back Wednesday. The Standard & Poor’s 500 index fell 44.65, or 2.94 percent, to 1,475.62 – moving below the 1,500 benchmark. The Nasdaq composite index fell 76.42, or 2.70 percent, to 2,748.76. For the year, the S&P 500 is up 4.04 percent, while the Nasdaq is up 13.81 percent.
The 13-nation euro hit a fresh record against the dollar – rising to $1.4729 – before falling back.
Comments from Federal Reserve officials didn’t give investors much reason to reconsider their bets. St. Louis Fed President William Poole said recent weeks have seen the credit markets make clear progress in returning to normal, but he said the Fed might have to make other rate cuts.
Such a move would likely hasten the dollar’s fall as investors seek better interest rates elsewhere. The central bank reduced the federal funds rate in September and October.
