Warning, reports push stocks down

Some pullback in the markets was expected after last week’s huge rally.

NEW YORK (AP) — Wall Street plunged for a second day, triggered by computer gear maker Cisco Systems warning of slumping demand and retailers reporting weak sales for October. Concerns about widespread economic weakness sent the major stock indexes down more than 4 percent Thursday, including the Dow Jones industrial average, which tumbled more than 440 points.

The two-day plunge totals about 10 percent for the major indexes. Paper losses during that time in U.S. stocks came to $1.2 trillion, according to the Dow Jones Wilshire 5000 Composite Index, which represents nearly all stocks traded in America.

Comments from Cisco that it saw a steep drop in orders in October and reports from retailers that consumers are skipping trips to the mall provided fresh evidence of the economy’s struggles. While sales at Wal-Mart Stores Inc. benefited from bargain-seekers, some specialty retailers posted huge drops in monthly sales.

“I think everybody kind of simultaneously — the consumers and businesses — is tightening belts, so that’s triggering a reasonably precipitous slowdown that’s widespread,” said Ed Hyland, global investment specialist at J.P. Morgan’s Private Bank. “This is something that we haven’t really seen, this level of this rapid and significant pullback both in the market and the economy.”

Thursday’s rout follows a drop of more than 5 percent in the market Wednesday that saw the Dow plunge nearly 500 points as investors fretted that weak readings on employment and downcast profit forecasts and job cuts from financial companies to steelmakers signaled broad economic troubles.

Still, the market’s two-day slide follows an enormous run-up since last week, so some pullback was expected, analysts said. Through the six sessions that ended Tuesday, the benchmark Standard & Poor’s 500 index surged 18.3 percent.

Richard Campagna, chief investment officer at Provident Investment Counsel in Pasadena, Calif., contends the market’s pullback isn’t surprising given the size of the recent run-up. He said the weak economic readings shouldn’t come as a surprise either, 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.

“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 shell shocked with the moves in the market.”

According to preliminary calculations, the Dow fell 443.48, or 4.85 percent, to 8,695.79 after falling as much as 502 in the final five minutes of trading. The blue chips remain 186 points above 8,451.19, their Oct. 10 closing low from the market’s yearlong decline.

Broader stock indicators also posted sharp losses. The Standard & Poor’s 500 index fell 47.89, or 5.03 percent, to 904.88, and the Nasdaq composite index fell 72.94, or 4.34 percent, to 1,608.70.

GM shares closed Thursday at $4.80, down 76 cents or 13.7 percent. Ford shares closed at $1.98, down 11 cents, or 5.3 percent.