Stocks drop as Dow ends at lowest close in more than 6 years

An important psychological barrier gave way on Wall Street Thursday as the Dow Jones industrials fell to their lowest level in more than six years.

The Dow broke through a bottom reached in November, pulled down by sharp declines in key financial shares. It was the lowest ending for the Dow since Oct. 9, 2002, when the last bear market bottomed out.

The move below that level dashed hopes that the doldrums of November would mark the ending point of a long slump in the market, which is now nearly halfway below the peak levels reached in October 2007.

The market's inability to rally also signals that investors see no immediate end for the recession, which is already 14 months old and one of the most severe in decades. Investors also haven't been impressed with two major economic initiatives from the Obama administration this week, an economic stimulus package and a mortgage relief plan.

"It is definitely, definitely a blow to psychology," said Quincy Krosby, chief investment strategist at The Hartford. "There is more pessimism in the market as to when the economy is going to pick up steam."

The Dow had been threatening to break through the November bottom since Tuesday, when the index tumbled 300 points on worries about the economy and the stability of banks in Eastern Europe. Stocks had barely finished above the November low on Tuesday and Wednesday.

On Thursday, persistent worries about financial and technology stocks weighed on the market, with steep drop-offs in financial bellwethers like Citigroup and Bank of America leading the way downward. Both stocks ended down about 14%.

The Dow lost 89.68, or 1.2%, to end at 7,465.95.

Broader indexes also fell. The Standard & Poor's 500 index ended down 9.48, or 1.20%, to 778.94, but finished above its Nov. 20 low of 752.44.

The technology-heavy Nasdaq composite index suffered the biggest hit Thursday after Hewlett Packard tumbled 7.9% after posting worrisome results. The Nasdaq fell 25.15, or 1.71%, to 1,442.82.

The Russell 2000 index of smaller companies fell 6.47, or 1.5%, to 416.71.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.49 billion shares.

Dan Cook, senior market analyst at IG Markets in Chicago, said the Dow's move lower is unnerving because without that level of support some investors worry there is little to keep stocks from falling farther.

"It's kind of like if we're walking across a frozen pond. If that ice starts to crack a bit we're going to be very wary," he said.

The news of the day didn't offer much support. Hewlett-Packard gave up nearly 8% after the computer and printer company turned in disappointing fourth-quarter sales, hurt by tightening spending at many businesses.

Even the bright spots weren't enough to lift the market. Sprint Nextel, the nation's third-largest wireless carrier, rose 20% after its fourth-quarter results came in better than forecast. And Whole Foods Market jumped 37% Thursday after earnings from the natural and organic grocer topped expectations.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, rose to 2.86% from 2.75% late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.31% from 0.30% late Wednesday.

The dollar was mixed against other major currencies, while gold prices rose.

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