U.S. stocks fell for the first time in three days on Thursday, pushed down by concern General Motors Corp. may file for bankruptcy and a plunge in energy shares following Merrill Lynch & Co.'s prediction that oil will hit $25 a barrel.
GM lost 16 percent after a person familiar with the matter said the largest U.S. automaker is exploring a reorganization with workers, creditors and lenders. Southwestern Energy Co., EOG Resources Inc. and Exxon Mobil Corp. slumped, sending the Standard & Poor's 500 Energy Index to a 6.2 percent decline. Apple Inc. slipped 4.7 percent as Nokia Oyj said the global mobile-phone market will shrink 5 percent or more next year.
The S&P 500 lost 2.9 percent to 845.22. The Dow Jones Industrial Average fell 215.45 points, or 2.5 percent, to 8,376.24. Indexes also dropped after the Labor Department said more Americans are collecting jobless benefits than at any time since 1982. Economists estimate a report today will show the unemployment rate increased to 6.8 percent, a 15-year high.
"As bad as you think it is, it's worse," said Diane Garnick, who helps oversee about $500 billion as an investment strategist at Invesco Ltd. in New York. "The chances of the economy turning around in the first half of 2009 are declining rapidly because unemployed people can't spur economic growth."
The S&P 500 has fallen 42 percent in 2008 as writedowns and losses at financial firms approach $1 trillion and more economists forecast that the U.S. recession will be one of the most severe in the post-World War II era. Today's decline pared its rebound from an 11-year low on Nov. 20 to 12 percent.
Sixteen companies in the S&P 500 fell to 52-week lows Thursday. They included Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, and Campbell Soup Co. None reached new highs.
"There's a concern out there that this isn't a recession, it's the Great Depression II, or the Great Recession I," said Kenneth Schapiro, president of Condor Capital Management, which oversees $500 million in Martinsville, N.J. "People have seen their retirement funds affected by what's happened and are concerned about putting more capital in."
