NEW YORK — Wall Street’s anxiety about Detroit automakers welled up Thursday, sending stocks sharply lower in an afternoon sell-off as investors grew fearful that a bill to rescue the companies wouldn’t make it through the Senate.
The pullback follows mostly moderate moves in stocks since mid-November and is a fresh reminder of investors’ fears about the economy.
Prospects for the $14 billion in loans to cash-starved General Motors Corp. and Chrysler LLC dimmed Thursday afternoon as opposition from both parties mounted. At the close of trading, the bill was stalled in the Senate, though negotiations were continuing.
Worries about job losses from a failure of even one of the Big Three automakers multiplied when the government reported a surprise jump in weekly unemployment claims Thursday, nearly a week after it said the nation’s unemployment rose to a 15-year high in November.
Wall Street has been betting Washington would extend a lifeline to the automakers and even recovered early Thursday from a sell-off at the opening bell that followed the unemployment report and a surprise increase in the nation’s trade deficit.
The Dow Jones industrial average fell 196.33, or 2.24 percent, to 8,565.09. The decline left the blue chips with a 0.81 percent loss for the week going into today’s session.
The broader Standard & Poor’s 500 index fell 25.65, or 2.85 percent, to 873.59, and the Nasdaq composite index fell 57.60, or 3.68 percent, to 1,507.88.
The Russell 2000 index of smaller companies tumbled 25.19, or 5.3 percent, to 451.21 as investors looked for the safety of larger companies expected to fare better in a weak economy.
