Mix of bad news pummels stocks

Wall Street crumbled Wednesday under a torrent of gloomy news, driving some major indexes to their worst one-day routs yet in the global credit crunch that began in midsummer.

The financial sector once again led the market down, as investors continued to be shocked by the extent of losses that banks and brokerages are suffering on mortgages and mortgage-backed bonds.

The Dow Jones industrial average sank 360.92 points, or 2.6%, to 13,300.02.

That was slightly smaller than the 362-point dive in the blue-chip index a week ago today, which also was fueled by a steep sell-off in financial stocks.

But the broader Standard & Poor’s 500 index lost 44.65 points, or 2.9%, to 1,475.62 -- its biggest one-day decline since February, surpassing even the worst days in August when the credit crunch rooted in the housing market’s woes began to spark heavy selling of stocks.

The technology-heavy Nasdaq composite index also had its biggest loss since February, falling 76.42 points, or 2.7%, to 2,748.76.

One measure of the intensity of the negative sentiment Wednesday: Losers topped winners by 10 to 1 on the New York Stock Exchange. By contrast, losers had a 6-to-1 edge in the big drop a week ago.

Washington Mutual triggered the latest flight from financial issues by warning of rising losses on mortgages, as more homeowners default.

New York Atty. Gen. Andrew Cuomo said his office was examining whether Washington Mutual pressured a big title insurer to inflate home values in appraisals, making it possible for borrowers to obtain mortgages they couldn’t otherwise afford.

WaMu shares dived $4.19 to $20.04. Among other lenders, Countrywide Financial fell $1.39 to $13.63, FirstFed Financial lost $2.94 to $36.28 and IndyMac Bancorp slid $1.41 to $11.08.

Brokerage stocks were hammered on expectations that they would face further losses on mortgage securities they hold. Merrill Lynch tumbled $2.38 to $53.99, Bear Stearns slid $5.43 to $96.57 and Lehman Bros. dropped $3.41 to $55.96.

“It seems every time there’s any significant new headline that relates to the mortgage mess, that gets people spooked and the selling really starts to accelerate,” said Eric Kuby, chief investment officer of North Star Investment Management.

An index of financial companies in the S&P; 500 plunged 5.1%, pushing its loss for the year to 18.5%.

But investors were in a mood to sell more than financial stocks. With the dollar slumping to record lows against key rivals, fears mounted that foreign investors could begin to bail out of U.S. securities.

The euro surged to a record $1.467, up from $1.455 on Tuesday and $1.32 at the start of the year. The dollar fell to 112.88 Japanese yen from 114.57 on Tuesday.

Worries about the dollar were fanned by comments by some Chinese officials who said China wanted to hold more of its foreign reserves in stronger currencies.

Although the weak dollar helps U.S. exporters, many multinational industrial shares slid with the broad market. Deere lost $5.98 to $154.32. United Technologies dropped $2.16 to $74.46.

Investors also sold gold-mining stocks -- even as near-term gold futures jumped to a fresh 27-year high, up $10.20 to $831 an ounce.

Barrick Gold gave up 74 cents to $46.24.

The news got worse after markets closed: Cisco Systems and American International Group declined after the release of their quarterly earnings.

Network equipment maker Cisco, which fell $1.33 to $32.75 in regular trading, slid to $29.77 after hours as investors expressed concern about the outlook the company gave with its report.

Insurance giant AIG, off $4.15 to $57.90 in regular trading, dropped to $56.20 after hours.

Energy stocks fell even as crude oil prices hit a record high of $98.62 a barrel in trading, then closed off 33 cents at $96.37.

Exxon Mobil lost $2.83 to $87.20. Chevron sank $3.10 to $87.54.

As usual in times of extreme market stress, some investors fled into Treasury securities, driving yields sharply lower.

The 10-year T-note yield slid to 4.31% from 4.37% on Tuesday.

In other market highlights:

* General Motors declined $2.21 to $33.95. The company reported a massive third-quarter loss, including tax write-downs.

Mortgage-related losses at GM’s partly owned finance unit overwhelmed auto sales that were the highest ever.

* Capital One plunged $9.23 to $50.21, the largest drop since October 2002. The biggest independent U.S. credit card issuer said its cost for bad debts tied to mortgages and credit cards would be worse than predicted.

American Express and other U.S. credit card issuers may be forced to revise their loss estimates after Capital One boosted its forecast, Morgan Stanley analyst Kenneth Posner said. American Express, the third-largest credit card network, fell $3.20 to $55.37.

* Wall Street’s slide pulled foreign markets lower. The Mexican market slumped 2.8%. Canada’s main index fell 1.8%.