Dow dives 213 points amid new worries

NEW YORK (AP) — The stock market stumbled Thursday as President Barack Obama proposed an overhaul of the nation’s banking system that could limit financial companies’ ability to make huge profits on trading.

The Dow Jones industrial average skidded 213 points after dropping 122 on Wednesday, giving the Dow its biggest two-day point drop since late March. The index has seen four straight triple-digit moves and the latest slide erased the Dow’s gains for 2010. Bond prices rose as the stock market became more volatile.

New rules on risk-taking at banks could mean changes for how big financial institutions like Bank of America, Citigroup Inc. and JPMorgan Chase & Co. are structured. Each of the stocks fell more than 4 percent.

Weakness in manufacturing also brought concern that the economy might not be recovering as quickly as hoped. The Philadelphia Federal Reserve said manufacturing in its region fell in January from December. Its index of regional manufacturing conditions fell to 15.2 from a revised 22.5 last month.

Another test for the market could come today. Google Inc. posted a five-fold jump in its fourth-quarter profit after the closing bell on double-digit revenue growth, but the results fell short of expectations. The stock fell $30.13, or 5.2 percent, to $552.85 in after-hours electronic trading after edging up 0.4 percent in regular trading.

Patrick Galley, chief investment officer at RiverNorth Capital in Chicago, said stocks have risen so fast in the past 10 months that expectations about an economic recovery are getting too high.

“The market can be quite fickle just because of the huge run-up that we’ve had,” he said. “A lot of folks have their trigger finger on the sell button if they start to sense that news won’t meet expectations.”

According to preliminary calculations, the Dow fell 213.27, or 2 percent, to 10,389.88, its biggest point and percentage drop since Oct. 30. The index is down 335.55 points, or 3.1 percent, in two days. That was the biggest point drop since the two days ended March 30 and the biggest percentage loss since June 16.

The index hasn’t closed with triple digit moves in four straight trading days since May 6-11.

The broader Standard & Poor’s 500 index fell 21.56, or 1.9 percent, to 1,116.48. The Nasdaq composite index fell 25.55, or 1.1 percent, to 2,265.70.

Concern about the U.S. economy grew Thursday after an unexpected jump in unemployment claims. The Labor Department said workers filing for unemployment benefits for the first time rose by 36,000 to 482,000 last week. Economists polled by Thomson Reuters were expecting a small drop. The four-week average rose for the first time since August.