Stocks Tanks for Second Straight Day

Richard Campagna, chief investment officer at Provident Investment Counsel in Pasadena, Calif., contends the market's pullback isn't surprising given the enormity of the recent run-up. He said the weak economic readings shouldn't come as a surprise given a freeze in credit markets that has disrupted lending and other economic activity since September.

Campagna said the light volume and overall fear among investors is exacerbating the market's volatility.

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"Some people are pushing this market around more than they should be out of fear," he said. Many everyday investors are sitting on the sidelines, he said. "Everyone has been shellshocked with the moves in the market."

In late afternoon trading, the Dow fell 431.69, or 4.72 percent, to 8,707.58. The blue chips have fallen as much as 454 in the session but remain above 7,882.51, their Oct. 10 trading low from the market's yearlong decline.

Broader stock indicators also posted sharp losses. The Standard & Poor's 500 index fell 45.96, or 4.82 percent, to 906.81, and the Nasdaq composite index fell 63.68, or 3.79 percent, to 1,617.96.

The Russell 2000 index of smaller companies fell 13.71, or 2.66 percent, to 500.93.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 1.05 billion shares. Analysts noted that the volume of the declines is light, raising some questions about the conviction of the moves.

The dollar traded mixed against most other major currencies, while gold prices fell.

Light, sweet crude fell $4.36 to $60.94 a barrel on the New York Mercantile Exchange as fears of a slowing economy led to predictions demand will fall.

The latest round of economic worries largely overshadowed interest rate cuts by central banks in Europe as stocks there tumbled after the moves. The Bank of England slashed its key interest rate by a bold 1.5 percentage points Thursday; the Swiss Central Bank cut its own key rate by a surprising half-point; and the European Central Bank lowered its key rate by a half-point.