The banking giant Citigroup once commanded a stock price of $55. But at one point on Thursday, as markets hurtled to their lowest close in 12 years, the shares were worth less than an item at the Dollar Store.
After months of headlong declines, this is what Wall Street has come to: Blue-chip companies, once considered safe investments and cornerstones of the economy, are the new penny stocks.
The bear market is tightening its grip, despite efforts by the government to support the economy and some of its biggest companies. Fears about the depth and breadth of the recession drove the Dow Jones industrial average down 4 percent more on Thursday, bringing its losses since January to 25 percent — just shy of the 33 percent decline recorded for all of 2008.
“It borders on unbelievable,” said Glenn W. Tyranski, senior vice president of financial compliance at NYSE Regulation. “You’re seeing companies that are just really suffering across the board.”
The number of companies trading at $10 or less on the Standard & Poor’s 500-stock index has increased tenfold since the market reached a peak in October 2007. And with no end in sight to the downward spiral, the New York Stock Exchange has temporarily suspended its $1 minimum share-price requirements to prevent a wave of delistings.
One share of General Motors stock, which fell below $2 on Thursday as it warned of possible bankruptcy, is not even enough to buy a gallon of gasoline for your Chevy. A share of General Electric, battered this week to little more than $6, would not buy two of the company’s compact fluorescent light bulbs. And at its current price of 73 cents, it would take two shares of Office Depot stock to buy a box of paperclips.
The Dow Jones industrial average closed at 6,594.44, down 281.40 points, or 4.09 percent — its lowest close since April 15, 1997. The broader S&P 500 fell 30.32 points, or 4.25 percent, to 682.55, its lowest close since September 1996. The Nasdaq composite index fell 4 percent, or 54.15 points, to 1,299.59.
The rout highlighted the apathy and pessimism that has seeped into all corners of the market as the global economic downturn deepens.
Investors had bid up shares on Wednesday, for example, on hopes that China would increase spending to shore up its unraveling economy, but sold off after the Chinese government swatted away those rumors. With so much uncertainty, investors are parachuting out of companies ranging from banks to retailers to utilities, and abandoning stock markets everywhere from Asia to Europe to Wall Street.
Many are concerned the recession may gain force before it ebbs, especially as job losses increase, a worry that is likely to drive stocks into a downward trend over the next few months. Economists expect the unemployment rate for February to rise to 7.9 percent from 7.6 percent in January, and they estimate that the economy shed 650,000 jobs last month. The Labor Department will release February’s unemployment numbers at 8:30 a.m. Friday.
“It’s just a continuing self-destructive market where even the slightest good news is considered negative,” said Peter I. Cardillo, chief market economist at Avalon Partners. “No one is taking a backseat approach. Everyone is just selling.”