Stocks Dive For Second Straight Day

Stocks have plunged again to levels not seen in more than five years as hopes fade that lawmakers will soon put together an aid package for U.S. automakers.

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Huge declines in the financial and energy sectors led stocks lower Thursday. The pullback for the second straight day amid heavy volume sent the Standard & Poor's 500 index down 6.7 percent to the 752 level, below the closing low of 776.76 logged on Oct. 9, 2002.

The Dow Jones industrial average, meanwhile, fell about 445 points, or 5.6 percent.

Before the opening bell, there was fresh evidence of the troubles facing the economy, with new claims for unemployment benefits rising to a 16-year high.

The Labor Department's report showed that new applications for jobless benefits rose to a seasonally adjusted 542,000 last week. Thomson Reuters said analysts expected 505,000.

Investors also remain concerned that the plan to give U.S. automakers billions of dollars in government-backed loans has stalled.

Wall Street saw a late-day sell-off Wednesday that sent stocks to their lowest levels since 2003. The major indexes fell more than 5 percent, while the Dow Jones industrial average tumbled 427 points to fall below 8,000, a psychological benchmark for the market.

The Dow closed at 7,997, while the S&P was down 52 points to 806, also a five-year low. The Nasdaq composite fell nearly 97 points to 1,386.

Investors were discouraged by the Federal Reserve's sharply lowered projection for economic activity this year and next. Economic worries caused across-the-board selling, with financial stocks particularly hard hit.

The uncertainty facing companies around the world was evident after U.S. consumer prices fell 1 percent last month, the largest drop in the past 61 years. While beneficial to consumers, lower prices hurt corporate profits and raise the threat of deflation.

Markets around the world on Thursday were once again following Wall Street's lead.

European and Asian stock markets tumbled amid new recession fears.

Benchmarks in Tokyo and Seoul lost almost 7 percent, and European markets opened about 2 percent lower.

Meanwhile, oil prices were at their lowest in nearly two years, trading under $53 a barrel.

Fed Hints At Another Rate Cut

Facing the likelihood of "significant weakness" in the economy, some Fed officials suggested "additional policy easing could well be appropriate at future meetings," according to documents from the most recent closed-door deliberations on interest rate policy at the end of October.

That means interest rates may be going lower still next month.

Minutes from the Federal Reserve's Oct. 29 policy-setting session hint at another rate cut. Its next scheduled meeting, the final one of the year, is set for Dec. 16.

At the last meeting, the central bank cut rates to 1 percent, a level seen only once before in the last half-century.