Business

Stocks plunge as automaker plans are rejected

NEW YORK – Wall Street’s big March rally was officially on hold Monday as concerns about the future of the auto and financial industries led investors to take a break from buying.Major market indicators fell at least 3 percent, including the Dow Jones industrial average, which lost fell 260 points.The White House rejected turnaround plans from General Motors Corp. and Chrysler on Monday, warning that more concessions were needed from unions and creditors before they could be approved. Fears of an automaker bankruptcy have been looming over investors for months, and the latest developments made the market even more uneasy about the industry.At the same time, investors remained on edge about the fragile banking industry. Treasury Secretary Timothy Geithner said Sunday during a television interview that banks would likely need considerably more money.However analysts said the pullback, which began Friday, wasn’t surprising after the Dow surged 21 percent over just 13 days.The rally began in early March and was fueled by economic and corporate reports that were starting to look more encouraging. Now, investors are taking money out of the market ahead of economic numbers coming out this week and first-quarter earnings in the weeks ahead, fearing that disappointing data will set the market back.With the economy still deeply troubled, some analysts say the market may have gotten a bit ahead of itself.”I think we had a huge run up ? that was not really justified,” said Peter Jankovskis, co-chief investment officer at OakBrook investments. “There are a lot of negatives right now on the horizon.”Also among investors’ chief concerns is Friday’s March employment report, which is expected to show that U.S. employers shed more than 650,000 for the fourth straight month.In early afternoon trading, the Dow tumbled 260.53, or 3.4 percent, to 7,515.65. The Standard & Poor’s 500 index fell 27.10, or 3.3 percent, to 788.84, while the Nasdaq composite index fell 46.03, or 3 percent, to 1,499.17.The Russell 2000 index of smaller companies dropped 13.02, or 3 percent, to 415.98.About 13 stocks fell for every two that rose on the New York Stock Exchange, where volume came to 584.2 million shares.Analysts had warned that the market’s advance was likely a bear market rally and not quite the beginning of a significant turnaround. Rallies within bear markets can ratchet up big gains and last for long periods, but they also can easily come crashing down.”Twenty percent is a normal bear market rally,” said Ron Weiner, president and chief executive of Westport, Conn.-based investment advisory firm RDM Financial. “Testing bottoms is a long-term process.”Financial stocks weighed heavily on the market Monday.The administration’s bailout fund for battered banks still has $135 billion left in it, but Geithner this weekend did not rule out seeking more money from Congress to coax banks into lending.

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