April 16, 2005

Bush economic policies come home to roost; Dow takes biggest plunge in two years

U.S. stocks tumbled, pushing the Dow Jones Industrial Average to its biggest drop in almost two years, in a selloff sparked by International Business Machines Corp.'s disappointing earnings report.

Benchmark indexes had their steepest weekly declines since at least August, led by companies such as General Motors Corp. and Alcoa Inc., as well as IBM.

"The significance of IBM is more than just technology -- in the eyes of the market, it's indicative of the slowing economy," said Christopher Sheldon, who helps manage $76 billion as director of investment strategy at Mellon Private Wealth Management in Boston.

Losses circled the globe amid renewed concern that demand in the world's largest economy may be waning. An improved profit outlook from General Electric Co. and better-than-expected earnings from Citigroup Inc. failed to boost the U.S. market.

The Dow average slid 191.24, or 1.9 percent, to 10,087.51, its worst one-day performance since May 2003. The Standard & Poor's 500 Index lost 19.43, or 1.7 percent, to 1142.62, its largest drop since September 2003. The Nasdaq Composite Index slumped 38.56, or 2 percent, to 1908.15.

On the New York Stock Exchange, almost seven stocks fell for every one that gained, the broadest retreat in at least nine months. Some 2.2 billion shares changed hands on the Big Board, making it the second-busiest trading day this year.

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